Florida: The Fastest Growing State and The Real Estate Market
According to a 2022 Census report, Florida now is the fastest-growing state for the first time since 1957 and the third largest state besides California and Texas. Florida’s population increased by 1.9% to 22,244,823 between 2021 and 2022. Since 1946, Florida’s percentage increase in population has fluctuated but remained positive. The advent of air conditioning in the 1950s brought increased population growth in our state, yet the last time Florida was the fastest growing state was in 1956 and 1957 during the peak of the baby boom, when Florida’s annual growth rate increased to 8%, while the national growth rate at that time was between 5% and 2%. Fast forward to the time period between 1960 and 1989, Florida’s annual growth rate hovered over 3%.
Picture courtesy The Sun Sentinel
In the 2000s, Floria experienced a slowing growth rate at approximately 1.7%. Yet, this rate when compared to the national growth rate of 1% per year, Florida’s previous growth rate was still considered brisk. Our population now is nine times what it was in 1946, and we are currently the tenth most densely populated state.
What has accounted for Florida’s population increase?
As we had noted in a previous blog, part of the reason for our increased population growth is that people in high tax states like New York and New Jersey have relocated to Florida due to our lack of State income tax. Large corporations also have relocated in Florida to lower costs, seeking a friendlier business climate. Florida, as a worldwide tourist destination, lends itself to people who come and simply wish to remain here.
Aside from taxes, people obviously choose to live in Florida due to the warmer weather. We are, after all, the Sunshine State. While we may experience a cold spell and hurricanes, we certainly do not experience the negative temperatures and massive snowstorms as others do throughout the Northeast, West, and Midwest.
Further, during the height of the COVID-19 pandemic, strict COVID-19 restrictions in other states led nearly 330,000 people move to our state where such restrictions were not in place. Businesses and schools remained open, and businesses were ultimately banned from requiring employees to be vaccinated.
Picture courtesy The Sun Sentinel
How does this growth affect the housing market?
With more and more people relocating to Florida, there is more of a demand for housing. While the housing market has slowed due to increased mortgage rates and overall inflation and higher rental rates, the Florida housing market is still overall considered strong and some predict it to remain so in the next five years. How? Cash buyers are able to purchase real estate regardless. Further, there still is a “fear of missing out” attitude amongst homebuyers, based upon concern that rates will continue to increase so it is best to still purchase now, which is fueling the market although slowly. Moreover, the government may start to ease credit requirements, allowing lenders to make more loans. Rates have actually dropped from a high of 7.5% to 6.5%.
What does this all mean?
With more people relocating to our state, the demand for attainable housing is a priority especially since the rental market remains overpriced. Aside from decreasing mortgage rates and lowering inflation, loosening of credit would lead to more people being able to purchase homes yet ironically prevent inflation from cooling. The question is the timing of these events to happen in order to provide attainable housing needed for the influx of people relocating to Florida.
From The Trenches