A stampede of Northeasterners in search of sunshine and cheaper living sent Florida’s housing market into a frenzy through the pandemic. The manic demand is finally starting to wane.
Single-family home prices in Florida have flattened for the first time since 2011, after climbing almost 50% in the past three years. Inbound moves are slowing. And soaring mortgage rates and insurance premiums have eroded one of the Sunshine State’s most alluring attributes: affordability.
“The fact that Florida is getting more expensive is making it less attractive to homebuyers,” said Daryl Fairweather, chief economist for Redfin Corp. “It becomes a concern for people trying to fix their monthly housing expenses.”
The pullback in Florida, while still moderate compared with downturns in once-hot Sun Belt areas like Phoenix and Austin, shows the limits of a pandemic boom that has priced out locals and inflated the cost of entry for newcomers. One top destination for New Yorkers heading South — Miami — is now the most-unaffordable metro area in the US, according to May data from RealtyHop on homeownership expenses relative to incomes.
Billionaire venture capitalist Peter Thiel said last month that he’d be reluctant to relocate his operations to Florida from California’s Silicon Valley because home prices in the Sunshine State have jumped so much.
But it’s the wealthy who have the most to gain from Florida’s lack of a state income tax. For the middle class, other costs bite, including property insurance. In a region especially vulnerable to climate change, premiums are among the highest in the country.
Florida’s politics have also been shifting as Governor Ron DeSantis, a US presidential candidate, pushes the state into the epicenter of the most polarizing national debates, including controversies over book bans and LGBTQ issues.
`We Have to Leave’
Tampa agent Vanessa Charles said Covid brought a flood of new arrivals looking to escape mask mandates, crime and income taxes in more-liberal states. But more recently, she said, the politics are making clients antsy.
“People are looking at Florida differently now,” Charles said. “A lot of families who moved here called and said. ‘We have to leave.’”
One of the calls came from Jessica Cameron, who had left Florida five years ago for Georgia while her husband completed his chiropractic degree. They returned at the end of 2022, buying a four-bedroom house in Land O’ Lakes for $589,000 to raise their three kids.
It’s the other costs — from property and car insurance to utilities — that caught them off guard. Their water bill in Georgia was less than a third of what they pay now.
“Once I took a tally of the expense of everything, it blew my mind,” Cameron said.
Cameron said she’s disappointed by government policies targeting transgender Floridians, and limited access to library books at her fourth-grade son’s school. The family plans to tour the Midwest next month in search of a new place to live.
“What’s happening here breaks my heart, to be honest,” Cameron said.
Migration Slows
So far this year, 56% more people moved into Florida than moved out, data from United Van Lines show. That’s down from 58% for all of 2022 and 62% in 2021 — the peak of the pandemic migration.
But some agents say they haven’t noticed much of a change, that there’s still a steady flow of people relocating to Florida, including for political as well as financial reasons.
While the hurdles for buyers are getting higher, the state’s housing market has proved more resilient than in other pandemic boomtowns. Florida has some cushions, such as a strong job market fed by Wall Street and tech company relocations, year-round sunshine that continues to attract telecommuters and rich Latin American buyers fleeing turmoil in their home countries.
The state also remains popular with affluent retirees, who aren’t worried about high mortgage rates because they’re paying cash, according to Brad O’Connor, chief economist for the Florida Realtors trade group.
“It’s still a very active housing market,” O’Connor said. “We still have an influx of out-of-state buyers and it’s still a good deal compared to high-cost states.”
There are signs of a strain, however. This April, single-family home prices statewide held steady from the same month in 2022, according to the Florida Realtors — a turning point for the market after the unprecedented run-up in values brought on by the buying frenzy.
Some markets are cooling faster than others. For the four weeks through June 11, Tampa prices fell 3.9% and Jacksonville’s were down 2% from a year earlier, according to Redfin data for all types of homes. Properties are also lingering longer on the market than the same time last year, with active listings jumping as much as 28% in some Florida metros, the brokerage said.
Even Miami is losing some steam, though prices in the period were up 8.9%, the biggest gain in the US, according to Redfin.
Looking Elsewhere
Florida’s high housing costs are pushing some buyers to search elsewhere. A Texas couple looking to get more for their money recently started in Tampa and worked their way up the Gulf Coast, said their agent, Donna Davis. They’re now leaning toward listings in Alabama. Property insurance is a key consideration, she said.
Florida’s insurance industry is in a crisis as a result of catastrophic storms and a flurry of fraudulent claims, which have pushed average annual home insurance premiums to $6,000 — nearly four times the US average, according to the Insurance Information Institute. The industry group said the average premium in the state has climbed 100% over the past three years.
Davis, who is based in Orange Beach, Alabama, owns condos on either side of the state line and has watched her annual insurance costs diverge over the past few years. In Alabama, the premium is $1,600, while it has ballooned to $9,000 in Florida.
“Now, it’s almost unobtainable,” she said. “You almost have to self-insure.”
Even as the frenzy cools and homes take longer to find buyers, O’Connor doesn’t see demand or prices sliding precipitously in Florida. Owners who bought early in the pandemic are reluctant to give up their low-rate mortgages for costlier ones, keeping inventory tight.
“The stream of out-of-staters kept us ahead of much of the country,” O’Connor said. “I’m not terribly worried about a huge crash in prices, because unlike the last crash, we don’t have any supply.”
--With assistance from Jennifer Epstein.
This article was provided by Bloomberg News.