Making predictions on Florida’s housing market can be quite difficult. The current market trend can be attributed to factors like immigration, employment, government regulations, and rising interest rates.
In this article, we’ll dive into the key factors that will greatly shape the future of Florida’s real estate landscape. We’ll delve into Florida’s housing market predictions for the upcoming years and provide you with the knowledge to stay afloat in this dynamic market successfully.
Factors Influencing Florida’s Housing Market
Florida has long been a favored spot for vacations, but it has now become one of the most preferred destinations for people relocating.
Currently, Florida’s population has already surpassed 22 million — a number that is continuously growing every day. With an average addition of 1,000 people per day, Florida has been dubbed as the fastest-growing state in the country today.
What really caused this growth? What’s the reason why more people are moving to Florida? Let’s discuss it further in the following sections.
Population and migration work hand-in-hand in influencing the housing market. As the population continually grows due to a constant increase in migration, the demand for housing also increases. Consequently, this increase in demand leads to higher property prices and rentals, as well as a potential shortage in the housing market.
We can see a significant impact on the home market in locations with stronger employment opportunities. This is due to the fact that people are more willing to relocate to places with plentiful job prospects. As a result, the demand for homes in these locations may exceed the supply, pushing up housing costs.
What caused this massive influx of people?
Florida’s population increased by 1.9% between 2021 and 2022, surpassing Idaho, which was the fastest-growing state the previous year.
Florida is a major hub for agriculture, technology, tourism, and major corporations. Over the past decade, its population has risen by 15.6%, from 18.8 million to 21.7 million people.
It’s interesting to note that the 67 counties in the state did not all see an equal rise in population. Instead, a third of these new residents gathered only in a small number of counties such as Orange, Hillsborough, Lee, Polk, and Palm Beach. These five counties are all found in the state’s southeastern region, well-known for its beaches and pleasant climate.
Employment and economic indicators
Florida’s economy continues to recover from the effects of the COVID-19 pandemic. With a GDP of $1.1 trillion and one of the most diverse economies, Florida is now considered one of the most influential economic powerhouses in the country.
The country’s GDP grew by 2% during the first quarter of the year. Florida saw an annual growth of 3.5%, which is noteworthy when considering the hundreds of billions of dollars in economic activity. And among the largest states in the country, the Sunshine State’s growth was the fastest.
In terms of new jobs created, Florida is now ranked in third place. The fact that Florida had 9,578,500 employment in 2022—2,400 more than New York had at 9,476,100—shows that the state’s labor economy is expanding quickly and exceeding that of other states. Florida has a lower unemployment rate of 2.6%, compared to a 3.4% national unemployment rate.
These forecasts suggest that Florida’s economy will continue to grow, albeit at a slower pace than in recent years. The recession is expected to have a mild impact on the labor market, but Florida’s economy is still expected to outperform the national average.
Real estate development and construction trends
A piece of great news for Florida’s housing market is the rapid growth in residential construction. According to recent studies, Florida issued more than 212,000 building permits in 2022, ranking second in the country. Of the permits issued in Florida, the majority were for single-family units.
Construction industry trends are significant because they provide money, employment, and tax revenue for the state. Additionally, the activities in the construction sector have an influence on the activities in the manufacturing, wholesaling, warehousing, transportation, real estate, rental, and leasing services sectors. Therefore, construction trends are important indicators of the health of an economy.
Florida’s housing market is set to remain strong in 2023 and 2024, with ongoing demand and stable price growth. Yet, it’s expected to level off as growth slows, potentially leading to more balanced conditions around 2026-2027.
Government policies and regulations affecting real estate
Local, regional, and national policies affect the housing market in many ways. For example, zoning regulations set where housing may be built; building codes specify how buildings must be constructed; and incentives for affordable housing or sustainable development encourage certain types of development.
Florida has enacted a number of policies that encourage investment in the state’s real estate market. For instance, there’s the “Live Local Act,” which overrides local zoning laws. It permits developers to construct units in commercial and industrial zones, with the condition that 40% of them are affordable. This law also takes away local government authority to enforce rent control and overrides local regulations on density and building heights in specific situations.
Florida Housing Market Predictions
1. The market won’t be as crazy as it was
Remember what the real estate market was like during and after COVID-19 shutdowns? Totally insane! Panic buyers were left and right, overwhelming sellers with offers right after listing their homes on the market.
Since then, things have definitely calmed down both in Florida and all over the country. And that trend will continue for the succeeding years.
2. Prices will relax, but not plummet.
If you’re waiting for a market crash, you’re going to be waiting for a while. That’s because, for housing prices to drop, market inventory has to be overwhelmingly high.
Falling demand is only one ingredient needed for a large correction; there is also a need for a flood of supply which came from overbuilding and foreclosures in the last housing cycle.
3. The demand for housing will not diminish
With inflation still on the rise across the country, there would be buyers who’d be cutting back on spending to create more margin in their budget.
But despite the need to reduce expenditure, people would still want to own a home.
Investing in Fort Myers and Cape Coral
Investing in Fort Myers and Cape Coral real estate offers lucrative opportunities, but it’s not without risks. The appeal lies in the affordable house prices and cost of living, particularly for those seeking a budget-friendly, climate-rich lifestyle.
- Strong Housing Market – Home prices in Fort Myers have increased significantly over the previous year, and it is anticipated that this upward trend will continue throughout the city. Meanwhile, compared to other cities in Florida, Cape Coral offers relatively affordable housing options. This makes these cities an attractive market for both first-time homebuyers and real estate investors.
- Growing Population – Both city’s population has steadily increased as a result of the region’s warm weather, beaches, and outdoor activities. Due to the high demand for housing brought on by this population growth, prices of homes continue to rise making it advantageous to home sellers.
- Low Taxes – Florida has a reputation for being a tax-friendly state, with no state income tax, no estate tax, and relatively low property taxes. This makes it an attractive destination for retirees and investors looking to maximize their income and minimize their tax burden.
- Rentals – In the area of Fort Myers, there has been an increase in demand for rental homes. The rise in demand may be attributed to the region’s expanding population, strong labor market, and rising influx of retirees. Cape Coral also sees a rise in demand as a result of being a popular tourist location. A big multifamily building investment may offer investors a reliable source of cash flow from rental revenue as well as the possibility of long-term growth.
- Interest Rates – High interest rates can make it more expensive for investors to finance their properties, which can reduce their overall return on investment.
- Natural Disasters – Fort Myers and Cape Coral are located in a region of Florida that is prone to hurricanes and other natural disasters. This adds risks for real estate investors, who may need to pay higher insurance premiums and take extra steps to protect their properties from damage.
You can also check this blog to know why Cape Coral is one of the best places to live in Florida today.
Predicting the housing market in Florida and making transactions today can be very tricky. It needs a lot of planning and consulting with a professional Realtor® and other real estate professionals to navigate successfully a turbulent market like the one we’re currently in.
If you’re interested in buying or selling a home today but unsure how to strategically navigate the market, you can ask for professional advice by booking a call with us! Click here.