Shifts in Florida home buying
Once a cost-of-living safe haven, Florida’s housing market may becoming unsustainable from combination of diminishing affordability and aging infrastructure.
A report from Cotality points out two key warning signs that could determine how the state’s real estate might look going forward.
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Florida’s real estate
For a long time, Florida drew in droves of home buyers with its low taxes and reasonable property values. The consistently high rate of migration included everyone from retirees to young professionals starting their careers.
The Sunshine State’s population grew from 20.3 million in 2015 to almost 23.4 million in 2024, according to Cotality’s Florida on the Brink report. However, the report suggests the state may be at an inflection point, driven by two key warning signs.
Homeowners and prospective buyers could start relocating first due to “the link between natural disasters, soaring insurance costs, and declining affordability” and second to the increasing “tension between business growth and housing availability.”
“The last 25 years have seen home prices, homeowners’ insurance, and property taxes surge in Florida,” said Selma Hepp, chief economist at Cotality. “When you add in the unflagging migration that is straining the state’s public services and inflated costs across the board, the pressure on the quality of life has become so great that it is beginning to tip the balance. Many households are finding it increasingly difficult to stay in the state.”
The median home price of $393,500 in Florida surpassed the national average in October 2024 while Miami’s median reached $629,575. Cotality highlights that the influx of affluent home buyers has made the state less affordable. Data from the U.S. Census Bureau shows the top five states for Florida migration in 2023 were New York (11%), Georgia (7%), California (6%), Texas 6%), and New Jersey (5%).
“While Florida’s metros have topped the list of hottest appreciating housing markets in recent years, the increasing costs of persistent natural disasters and consequent pressure on insurance expenses and rebuilding costs are starting to weigh on home prices in west Florida,” said Hepp. “Migration to Florida markets resulted in strong demand for housing and some of the highest rates of home price appreciation since the onset of the pandemic. Among the largest U.S. metro areas, Miami tops the list with some of the highest cumulative increases in home prices over the last four-year period. Tampa was a close second.”
While living in Florida comes with the need to withstand hurricane season, the gulf coast had provided a safer harbor with fewer and less intense storms. However, Hurricane Milton altered that paradigm in 2024 accounting for an estimated $34 billion in wind and flood loss.
Because of the higher frequency of weather catastrophes from man-made climate change, insurance companies are increasingly dropping their coverage or spiking prices — which is causing a hidden housing crisis. Of course, when homeowners are uninsured and disaster strikes, they don’t always have the funds to pay their mortgage.
A separate report from Intercontinental Exchange showed Florida had the largest annual growth in non-current mortgages in March. Combined foreclosures and delinquencies jumped 10.4% year-over-year, overshadowing Colorado’s 6.7% and California’s 5%.
“Florida’s rapid price appreciation combined with soaring home insurance prices and the threat of hurricanes has led people to start looking at other nearby states,” said Hepp. “When people leave, they are seeking the ingredients that made Florida so prosperous in the first place.”
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Advice for home buyers
Buying a home in Florida could still be a fine choice, as long as you weigh all the potential factors.
Keep in mind that rising property values and insurance prices have become common in the state. If you’re ready to get started, reach out to a local lender, see if you qualify for financial assistance, and know your options after a natural disaster.
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Written by: Paul Centopani