Florida’s Market Changes Here to Stay (Part 3)

ORLANDO, Fla. – Florida is in the process of growing up. The state economy is more diversified now than ever, with an array of jobs in industries that didn’t exist a few decades ago. The pandemic pushed open a door that was already cracked. Through it came a lot of wealth, either actively or passively earned. Pricing is up everywhere and will likely continue to be sustained by the wealth of those who recently moved here.

As discussed on part 1 of this series, prime-age workers, 25 to 55, moving to Florida increased significantly from 2020 to 2022, with a positive net migration of over 175,000. We also identified the markets where they tended to move. In part 2, we examined the impact movers had on the markets they entered, depending on their salaries and ability to support higher asking prices for homes.

Now we’re going to take it home by offering some analysis and takeaways.

Analysis:

The standouts: Key West and Naples

Let’s start with the top right quadrant of the chart above, where mover income exceeded stayer income and price appreciation was over 35%. There are two standouts: Key West and Naples.

In both cases, the median sale price increased by 45% and 55% respectively, with median sale prices exceeding $500,000. The median sale price in Key West was $850,000 and the Naples-Immokalee-Marco Island MSA was $598,000 in 2022

Both areas have long been wealthy pockets in Florida, particularly among retirees. What is interesting about these metros are the increase in out-of-state movers with high incomes. Wealthy people moving to these areas is a common trend, but that people moving in from out of state exceeded the wealth of people already there is notable. This is likely due to the trend of people moving to Florida during the pandemic when prices were still somewhat low, even in our high-cost areas.

Flush with cash-out equity from wherever else they came from (which was likely more expensive), these buyers were able to push prices up. The geographic proximity of Cape Coral-Fort Myers geographic proximity to Naples likely benefited from the spillover effect as people were able to get similar lifestyle and amenities found in Naples with slightly more affordable options.

Employment hubs: Tampa, Orlando, Jacksonville and Miami

In the traditional employment hubs in Florida, like Tampa, Orlando and Jacksonville, each of these metros experienced both high income migration and price appreciation, though more pronounced in Tampa. This shows that people moving to Florida were able to retain or find high-paying jobs and continue to have an income that exceeded those who were already here.

One notable area is of course Miami-Fort Lauderdale. This metro area saw the highest ratio of mover to stayer income, but limited price appreciation. This is largely due to prices already being among the highest in the state and in some cases, the nation. Price growth on an already high-cost area isn’t as likely as a place where there is more room to grow.

However, don’t be fooled by its location on the chart. Miami experienced the highest growth of people moving to Florida who outearned those already here. This was one of the most talked about stories at the time, where technology, finance and other professional and business services companies were moving to Florida during the uncertainty of the pandemic looking for a place to continue to operate.

The takeaways

Florida’s growth is only going to continue. For people who have been here for a long time, these growing pains can really hurt as affordability erodes. It’s hard for locals to compete for homes when people from other parts of the country come in and push prices up. It’s also harder for people coming from other countries who now have to compete with domestic wealth for properties.

If you’re working with local buyers, be mindful of the pressures on pricing and how creativity and compromise may be helpful for Floridians to stay here. If you’re working with out-of-state buyers, remind them that while their dollar does go farther here than it likely did where they came from, the seemingly deep discounts that brought people here in 2020 have largely gone away. Pricing is up everywhere and will likely continue to be sustained by the wealth of those who recently moved here.

Jennifer Warner is an economist and the Florida Realtors Director of Economic Development.

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