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With An Influx Of People Moving To Florida, What Does This Mean For Florida Real Estate?

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At the height of Florida’s recent population boom, The New York Times reported that nearly 1,000 people were flooding into the state each day. As for what triggered this influx, there are several factors to consider. 

For starters, throughout the COVID-19 pandemic, people suddenly found themselves free to work remotely, untethered from the densely-populated metropolitan areas closer to their jobs. At the same time, residents of large cities such as New York and Chicago were growing tired of Covid restrictions and craving wide open spaces.

A global pandemic, advancements in tech that further enabled remote work, and a nationwide need for change created a perfect storm for the Sunshine State’s real estate market.

Pros and cons of Florida’s housing boom

“To fully understand today’s real-estate explosion, it helps to look at market cycles historically,” says Zahra Antaramian, co-founder and principal of ADG4. “A similar situation happened in 2007. We had 1,000 people per day moving here during that boom. We hit 1,000 again in 2021, and we have recently pulled back to around 800. This real estate trend isn’t unheard of in Florida. The difference this time, however, was that a worldwide pandemic was driving the changes in market conditions and demand.”

The current influx is causing both positive and negative changes for Florida residents. Some longtime inhabitants of the Sunshine State are thrilled to see their property values go through the roof and are opting to cash out. Meanwhile, developers are trying to meet inventory demands as fast as possible, pushing the cost of living higher by redeveloping areas that were once considered low- to middle-income housing. Many of these areas are now spotted with luxury condos, townhomes, and gated subdivisions. Florida’s real-estate development is creating a spike in new housing opportunities, but only for the people who can afford them. 

What does new development mean for Florida’s residents?

During Florida’s population influx, housing prices in the state skyrocketed. Cash offers were the norm — most well above the asking price — and parking at open houses was nowhere to be found.  

“We were seeing incredible numbers,” reports Antaramian. “We had buyers purchasing properties blocks from the beach on Facetime calls. These people had never seen the homes in person. It was a feeding frenzy. Now, we’re seeing the market correct to where it should be.”

If everyone is doing it, you shouldn’t be

With the flood of interest in real estate, there has been a predictable influx of new developers hoping to capitalize. Though many see Florida’s real-estate boom as an opportunity, Antaramian urges caution. “Developers assume that times like this are good to get into the industry,” she says. “Because demand is high, they assume risk is low.”

Antaramian warns there is no such thing as low-risk development. “My father always said that, if everyone is doing it, you shouldn’t be. By the time everyone has recognized a trend, the profit margin has been squeezed. The saturation means it’s only a matter of time before the tide turns against you.”

Is Florida’s real-estate bubble going to burst?

The most significant change in Florida’s market today is an increase in inventory. The Sunshine State’s available housing is double what it was at this time last year — a sign the sizzling market is cooling to match the initial influx. 

Despite this, Antaramian does not expect to see a significant drop in property values. “We may see a correction bringing us back to normal,” she says, “but that is to be expected. Buyers are becoming hesitant with rising rates and concerns of a potential recession. They also worry the market is sitting on top of a bubble.”

Antaramian says Florida’s real estate market is in a much better position than it was at this point in the previous housing boom. “Everything indicates that the last two years of transactions have been either cash or well-qualified buyers,” she reflects. “That’s an extremely different scenario than the one we saw during the last housing crisis when buyers were getting mortgages with no income verification. With a market supported by good fundamentals, I think the only ones who need to be concerned are developers starting large luxury projects that are dependent on moving a lot of inventory when buyer confidence is declining as fast as inventory is rising.”