Taking a look at the shining promises of real estate investing in Florida
Seeing the motto “In God We Trust”, you can say hello to the place in America known as the “The Sunshine State” due to its tropical climate that gives the majority of its days with bright sunshine gracing the entire state.
With a population of over 21 million, Florida is the third-most populous and the 22nd-most extensive of the 50 United States. Along with Hawaii, Florida is one of only two states that have a tropical climate and is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia, to the east by the Atlantic Ocean, and to the south by the Straits of Florida.
About two-thirds of Florida occupies a peninsula between the Gulf of Mexico and the Atlantic Ocean. Florida has the longest coastline in the contiguous United States, approximately 1,350 miles (2,170 km), not including the contribution of the many barrier islands.
Florida X Real Estate
So is Florida a good place to live?
Florida has a lot to offer—the warm climate, natural beauty, theme parks, resorts, and no state income tax. Precisely, this is why so many people want to live in Florida.
It’s true that Florida has one of the hottest real estate markets in the country, and for good reasons. Florida is an international tourist destination with year-round sunshine (earning the state its nickname “The Sunshine State”) with world-class theme parks. The economy is dynamic and diverse, with dozens of global business headquarters and a government that is both pro-business and pro-development.
Year after year, the market has been exceptionally good for investors, but is the Florida housing market still a smart investment post-pandemic?
Real Estate IQ makes a splash to the center of it all in hopes of proving why the demand for buying and renting real estate in Florida will keep growing in 2020 and beyond.
That chapter called “COVID-19 Pandemic”
The COVID-19 pandemic has not cooled off the home-selling market by any means. In fact, homes nationwide are selling like hotcakes and Florida is no exception. Sellers are reporting offers being accepted almost as soon as they are listed. The lowest interest rates in 50 years might have something to do with it.
Florida Realtors recently released its June 2020 numbers and here are the highlights:
- Closed single-family home sales increased from 301 last year to 327 (an 8.6% rise).
- New pending home sales for June were 406, up 26.1% from last year’s 322. Analysts consider pending sales to be a decent indicator of potential future closed sales.
- The median time to close on a contract was 44 days, down from 60 days last year.
Perhaps the most glaring indicator of the state in today’s real estate industry is the lack of inventory. For June, Citrus County for example had 637 active home listings — down 41.8% from last year when there were 1,095 homes.
Florida’s housing market in June showed positive signs of recovery despite the continuing coronavirus pandemic, with more new pending sales, more pending inventory and higher median sales prices compared to a year ago, according to Florida Realtors. Single-family existing homes sales increased year-over-year, up by 1.3% – the first increase since March and a significant change compared to April and May. Many buyers and sellers understandably hit the pause button in recent months due to the coronavirus, but record-low interest rates now are helping to fuel pent-up demand.
As families have been navigating the challenges of working remotely, online classes and other daily activities all together under the same roof, many buyers are considering new must-haves when it comes to their homes.
Read our blog to learn more about remote working amidst pandemic.
The Good News
Given these trends, recent reports identified locations that are likely to continue attracting new residents. To find the most affordable places in the U.S. that people have already been moving to in recent years, experts have analyzed population statistics from the U.S. Census Bureau and cost-of-living data from the U.S. Bureau of Economic Analysis. Looking only at locations where cost of living does not exceed the national average by more than 3 percent, reports have determined the cities and states with the largest population increases which makes them the most affordable large metros that people are moving to this year.
Many of these fast-growing locations offer attractive real estate investment opportunities. In a list of the most affordable metros that people have been flocking to in recent years, three out of 15 metros are from Florida which is a strong indication that the Florida real estate market is thriving despite the pandemic.
3-year population growth (percent): 7.78%
3-year population growth (total): 185,824
Cost of living (compared to national average): -1.3%
Median home price: $263,183
Average 2-bedroom rent: $1,248 per month
3-year population growth (percent): 5.88%
3-year population growth (total): 85,220
Cost of living (compared to national average): -4.5%
Median home price: $236,790
Average 2-bedroom rent: $1,059 per month
Tampa-St. Petersburg-Clearwater, FL
3-year population growth (percent): 5.63%
3-year population growth (total): 167,438
Cost of living (compared to national average): -1.0%
Median home price: $235,572
Average 2-bedroom rent: $1,206 per month
More sunshines and rainbows
As we move closer to finally beating COVID-19, inspiring stories of resilience and bouncing back to the way we were continue to surface. The state of Florida, with its gifted attributes and its dynamic people, offer the glittering promises of hope for a brighter future ahead.
Between now and April 1, 2024, the population of Florida is expected to grow by an average of 906 new residents per day, according to a news release from WFLA Channel 8 in Tampa. In fact, over the next two years Florida’s population is expected to grow by more than 700,000 residents.
In fact, the Florida Chamber of Commerce reports that by 2030 Florida’s population could reach nearly 26 million residents, more than the current population of Australia.
One of the many reasons that Florida is expected to keep growing so fast is from marketing the state as the ideal business location. The proactive, business-friendly government in Florida is an expert at attracting new high-wage jobs for workers who can compete on a global scale.
Job growth in Florida was 2.6% last year and ranks as the seventh-best state for doing business, according to Forbes. Florida is home to 19 Fortune 500 companies including Tech Data, Publix Super Markets, AutoNation, Lennar, CSX, Office Depot, NextEra Energy, Darden Restaurants, and Fidelity National Finance.
Real Estate Market
The latest release from the World Property Journal reports that home sales in Florida jumped 11% over the past months. As The Florida Times-Union in Tampa notes, buying and renting demand will keep growing in Florida as the local economy gets stronger and the population increases. Median home value in Florida is $238,600 with Zillow ranking the state’s real estate market as “very hot” (as of Oct. 2019). Median home values in Florida have increased
Strong Renters’ Market
The University of Central Florida’s Florida & Metro Economic Forecast predicts that single-family housing in Florida will remain in short supply despite housing starts accelerating.
Percentage of rental households in Florida keeps growing according to the Federal Reserve Bank, homeownership in Florida is 65.5%, the lowest level since 1990.
In fact, SmartAsset recently reported that homeownership rates in Miami, Tampa, and Orlando have all fallen below 50%, with people renting rather than owning in these top Florida real estate markets. Median monthly rents by bedroom in Florida range from $1,494 for a studio unit up to $2,135 for a four-bedroom house.
Historic Price Changes & Affordability
Every quarter the FHA publishes its House Price Index report that measures house price appreciation and the percent change in house prices in Florida.
U.S. News & World Report recently released its rankings of the best and worst states for housing affordability and overall cost of living. When compiling housing affordability data for Florida, researchers compare median housing prices to median family incomes and mortgage interest rates in the state.
Florida is ranked #35 in affordability, meaning that Florida has one of the least affordable housing markets among all 50 states. By comparison, high-cost states such as Oregon, California, and Hawaii were ranked 48th, 49th, and 50th.
Quality of Life
There are countless reasons why people choose to live and work in Florida. The state offers an almost ideal work-life balance with great job opportunities and near-perfect weather, culture, and recreation.
Florida is one of just seven states without personal income tax, according to SmartAsset. Cost of living in Florida is about 2% below the national average. U.S. News & World Report ranks Florida as the 13th-best state in the country, including top ten ratings for education, economy, and fiscal stability. Climate in the Sunshine State has annual summer highs of 81 degrees and winter lows of around 60 degrees. Florida is committed to education, with all Florida residents living within 50 miles of a community or state college or university.
With its alluring charm and undeniable beauty matched with its enormous ability to cope up with the recent pandemic, Florida is showing the world that it is still up to the challenge of becoming a major player in the real estate industry. With the figures and statistics coming out left and right, the “sunshine state of Florida” remains to be blessed with shining new opportunities of tomorrow for any hard-working real estate investor.
The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.