How is the Florida Real Estate Market?

The Florida Real Estate Market is the Best It’s Ever Been, if You Want to Sell.

If you already own a home in Florida, you know that right now your home is almost worth its weight in Bitcoins.

Why is the Florida real estate market so hot right now? Here’s a few reasons…

  • The winter of 2020-2021 was one of the coldest, snowiest we’ve had in years. Every winter a certain percentage of the population in colder northern states becomes “tired” of the cold weather and shoveling snow and considers moving south. Usually the colder the winters “up north” are, the higher the number of people who act on this impulse. This creates higher demand for homes which results in more sales, lower inventory and then even higher prices.
  • Florida took a different tack during the pandemic and offered a place with less restrictions. Lock-down-weary newly remote workers and tourist eventually flocked to the state and this helped support Florida’s real estate market and businesses that were still open. Many who closed their shops and restaurants in locked down states, moved to Florida and opened, bringing along some of their employees and hiring Floridians.
  • Many of the people who moved to Florida during the winter, when the weather is the best and everything is open and humming because the population swells due to snowbirds, told their friends how great Florida was based on a few days or weeks of “living” there. People are most infectious with Florida is paradise syndrome when they first move to the state.
  • Tax increase ideas are being floated or they have already been approved in states where some residents feel taxes are already too high. This has further accelerated the trend of people leaving higher tax locales for lower tax places, which increased after the $10,000 Salt cap was put into place.
  • It’s hard to visit a news website lately without seeing a new article on how great Florida is and how many people are moving to the sunshine state. This becomes a factor because if it’s in the news it must be true, and many people feel safer following the crowd. Just like negative news reports of damage and heartbreak in the news for months after a major hurricane hits Florida can shut off buyer demand, months of widespread farts smell like roses in Florida reporting increases buyer demand and pushes prices up

The Florida Real Estate Market is the worst its ever been, if you are a buyer.

What do you think would happen to the price of homes, or a loaf of bread for that matter, if rather than the normal supply, there were only 5 available to buy in your town? If you have been shopping online for a home in Florida right now, you know every week there are fewer homes for sale and new listings that come on the market are priced higher than similar ones that are still in pending status and haven’t even settled yet.

I obtained my first real estate license in 1986 and still have one today. In those roughly 35 years (yet I’m only 39) I have never seen a market this horrible for buyers. The real estate market in Florida from 2005 to 2007, right before the crash of the Great Recession was a brutal market for buyers. Every week there was less inventory to look at, and even the junk that came on the market at inflated prices sold right away. If you’re in the market as a buyer now, does any of this sound similar to today’s market?

Most who purchased during the last strong market hostile to buyers, saw their home plummet in value and it took years to climb back to what they paid.

You see, this has all happened before. Many times. The Florida Move Guide explains this in detail.

florida move guide book cover and discription

So When will the Florida Real Estate Market Change Direction?

Well, lets take a look at the points discussed earlier…

  • Coldest snowiest winter in years. Is this the new normal or have we returned to the past? Did Joe Biden solve climate change already, in just a few months? My guess is that an usually cold winter is now just something that happens about once every 10 years or so, and we return to the pattern of warmer winters with less snow like the last 20 years.
  • Lock downs and the pandemic. This will end at some point because of vaccinations, herd immunity, etc. When all states are fully open again, the advantage of being one of the few that are open will evaporate.
  • People who move to Florida during the winter when the weather is truly just warm and told everyone how great it was, will start to sing a different song during Florida’s other 3 seasons , summer, summer and summer. And no, Florida summers are not the same as they are in California, Michigan or New York. That’s just what they think based on vacations, wait until you live through a few of them.
  • Taxes, Salt cap. Will the Salt cap be repealed? Will high tax states continue to raise taxes? If Salt is repealed, that would probably slow the flow to Florida and may encourage some recent Florida transplants who are experiencing buyers remorse to move back.
  • The current relentless everybody is moving to Florida reporting that is encouraging even more people to do the same, isn’t entirely accurate. Here’s an excellent article written by Candace Taylor, a reporter for the Wall Street Journal, that explains what is really happening.

History Shows Us That All Bubbles Pop Eventually, This Latest Bubble in Florida Real Estate is No Different

I don’t know if they teach this any longer, but when I was in elementary school (no, I’m not going to say how long ago that was), we learned about what may have been the very first asset bubble, and crash ever recorded. If your as old (experienced? wise? what’s the word I’m looking for?) as I am, then you may know what happened during the 17th century to people who continued to pay too much for Dutch tulip bulbs as the price shot skyward, until there were no more “greater fools” left. Every bubble in history popped eventually.

Now I’m not saying that everyone who overpaid to secure a home in Florida in 2021 is a fool. If a buyer has more than enough money that they can buy assets like homes or stocks and then watch the value of them plummet and it would not affect them at all, that’s fine. But if a buyer is using a big chunk of their net worth, or going heavily into debt to overpay for a place in Florida, at the top of the worst buyer’s market the state has ever seen, and will be negatively affected if that home drops in value by at least 40%…

Some bubbles, like the ones that develop in the Florida real estate market, inflate and pop over and over again. I’ve heard some say that this time is different, it’s not like the subprime bubble that popped over 10 years ago, and they’re right. This bubble is worse. Multiple buyers are/were regularly offering far more than list price or what an appraisal of the property would show it is worth. You didn’t see that before the last crash, that is different.

It wasn’t the first bubble, but the real estate market in Florida inflated and popped in the past when President Carter was in office and the average mortgage rate rose to 16%. It happened during the 1979 energy crisis. Then it was because of the dot-com stock market melt down and so on. Saying it’s “safe” to badly overpay for a home or condo in Florida now, because factors that caused the last crash are present, ignores the fact that there have been many different causes in the past. FYI- There are lenders that are now offering mortgages similar to what was available before the subprime crash.

Bottom line: I don’t know exactly what pin will cause this current Florida real estate market bubble to pop, or exactly when it will happen (although I have my suspicions of both), but I do know this bubble will pop and it’s going to be something to watch.

Ron Stack “That Best Places Guy” of Zeus Press Inc.

  • You may be able to save yourself from all of the drama of the current market by reading the Florida Move Guide.

18 thoughts on “How is the Florida Real Estate Market?”

  1. I totally agree. I relocated here last year for work. I rent and will not buy due to the inflated prices, overpopulation, over building, high crime, and a plethora of other reasons. I do not plan on staying here much longer. I could buy a nice home with land and privacy in any state north of here for what small, outdated and crowded home sells for here. People should research before buying in florida. Its NOT a good investment.

  2. Although I agree to some extent on your “forecast” of real estate trends in Florida and why the market is going to stall at some point, I need to disagree that you feel hurricanes and designated flooding areas will affect the market more than it has in the past (short term at best due to recent events). The true culprit here is inflated price gauging from government supported entities like the NFIP and what lenders are being allowed to do with certain borrowers. The truth is borrowers should not be allowed to borrow money if their pocketbook says they can’t afford it. I mean if you can’t afford a $1000 a month in rent, how are lenders making loans with mortgage payments set up at $1350 a month? They are lending to “less than able borrowers” in some cases (again) and allowing higher DTI ratios. I can appreciate lenders wanting to provide more customers with options to purchase homes like using the Florida Bond program, lending credits, or SHIP funds for down payment purposes, but borrowers have to be realistic too. Not having a working car and then buying a home, will probably cause problems later when the new car payment is introduced into the household budget after the home is purchased.
    On a final thought, I don’t believe telling potential customers in our market (and first time home buyers) to “wait 3-4 years to buy a home and continue renting them instead” at ever increasing prices mind you(5-7% increases yearly on rent in a lot of Florida markets) is healthy for our economy or their pocketbooks. I mean….if you rent for 3 years at $1700 a month on a home that would have cost $1200 a month/minus tax write offs and some appreciation annually…the simple math is you are throwing away no less than $7000 a year in some rental cases…or $21,000 in 3 years. It’s not good practice to generally tell our market base “Renting is better than buying” based on the forecast of what (some believe) will happen based on trending analysis as Realtors. The 2006-2008 scene was drastic and to predict it’s here again is fear mongering. Just my thoughts, but I appreciate the convo on all!

    • Hello Joel,
      You wrote:
      “Although I agree to some extent on your “forecast” of real estate trends in Florida and why the market is going to stall at some point, I need to disagree that you feel hurricanes and designated flooding areas will affect the market more than it has in the past (short term at best due to recent events).”

      Here are 2 points to consider:
      1) During “normal” hurricanes seasons in the past (before the decade long hurricane drought) a good number of people left Florida because of the stress of hurricane evacuations, damage, flooding, etc. That didn’t happen during the recent record 10 year hurricane free period. Expect 10 years worth of those who “normally” would have left annually to leave all at once, increasing the number of homes for sale, at a time when hurricanes from Texas, Florida and Porto Rico have been in the news for months thereby reducing the number people who are willing to spend money to where they will be at risk also. The expected high today is 80 degrees in the northeast in the middle of October.
      2) FEMA is broke. To expect taxpayers in areas where hurricanes are not a threat to contine to susidize and bailout people who choose to move to areas where they will continually have to be rebuilt, is unrealistic. When people who live in areas at high risk of flood and hurricane damage have to pay the true cost of their own risk, it will affect demand and prices. Look for this to happen sooner rather than later.

      You also wrote: “On a final thought, I don’t believe telling potential customers in our market (and first time home buyers) to “wait 3-4 years to buy a home and continue renting them instead” at ever increasing prices mind you(5-7% increases yearly on rent in a lot of Florida markets) is healthy for our economy or their pocketbooks. I mean….if you rent for 3 years at $1700 a month on a home that would have cost $1200 a month/minus tax write offs and some appreciation annually…the simple math is you are throwing away no less than $7000 a year in some rental cases…or $21,000 in 3 years.”

      You’re right, it’s always “a good time to buy”, when you’re the real estate agent who will make a fat commission off of their purchase. The for the truth is, for the potential buyer it’s foolish to buy in a strong seller’s market when homes are overpriced and there’s nothing for sale. Buying for “the tax break”, where you have to lose a dollar in interest paid to the bank to gain just 30 cents in tax savings, is where the math really doesn’t make sense. Additionally, ask all those buyers who bought an overpriced home right before prices dropped by 50% in Florida the last time, if they wish they had waited to buy. Web searches for terms such as “the best places to live in Florida” are way off.

      Those who rely on generating income from Florida real estate sales may want to start tightening their belts now because after the restoration money is spent it’s going to look a lot like 10 years ago when the only thing you heard in most FL real estate offices was crickets. Thanks for your input Joel.
      _____
      Ron Stack “That Best Places Guy” of Zeus Press Inc

      • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.

      _____

  3. Hi, Ron,
    I’m wondering if you have any thoughts on whether or not the Tax Reform and Jobs Act of 2017 will affect the Florida real estate market. For example, I hear some “experts” saying the elimination of the state/local tax deduction will cause people to leave high tax states for lower tax states like Florida (in terms of income tax, that is). Will this new tax law alter your view about prices starting to fall this year or next?
    Thanks,
    Steve M.

    • Hello Steve,
      You wrote “I’m wondering if you have any thoughts on whether or not the Tax Reform and Jobs Act of 2017 will affect the Florida real estate market. For example, I hear some “experts” saying the elimination of the state/local tax deduction will cause people to leave high tax states for lower tax states like Florida (in terms of income tax, that is).”

      Here’s a few things I’ve observed over the decades selling real estate in multiple states:

      1) People have been moving out of high tax states for years. I can remember selling homes in Pennsylvania near the New Jersey border to people from New Jersey and New York who were fleeing those states for cheaper housing and lower real estate taxes, in the 1980’s. They kept their high paying jobs in those high tax states until they found similar work in PA. The same thing is still happening in what is now referred to as the Lehigh Valley in PA.

      2) People have been leaving high tax states to move to places like Florida, for years. Most people know that New York was the 3rd most populated state until Florida overtook it. What most don’t know, is that most of the people who move out of New York, moved to just one state. Florida. This has been going on for years. https://www.politifact.com/new-york/statements/2017/sep/29/edward-cox/new-york-has-most-people-leaving-other-states-coun/

      3) Many people fleeing high tax states move just across the state border because they can’t afford to leave their jobs.

      4) Pay in Florida is still lower than it is is in many other states for the same occupation, for many occupations (but this slowly continues to change). If you move to a lower tax state, but make less money there, what have you gained except expensive moving bills?

      5) There are other low tax states with higher wages, and or lower housing costs (such as Texas) and an overall higher quality of life. I would think that many low tax states will compete to attract those leaving high tax burden states.

      6) Florida’s overall tax burden is not that low according to the Tax Foundation that puts the Florida at the #17 lowest. Texas is #5, Nevada #8 and even Colorado (#2 overall in quality of life when many factors are compared) has a lower over tax burden than Florida.

      So the experts are right in saying that people will leave high tax states for lower ones, but people have been doing this all along. My gut feeling is that many of the negatives of living in Florida will only get worse with climate change and people will continue to move to the state in waves during good times, and leave in waves during rough times, just like they have for decades. When the waves are moving in, prices will shoot up and when they move out prices will crash. Bottom line? In my opinion, hurricanes, evacuations, hurricane damage repair billions, wildfires, recessions, stock market and real estate bubbles popping, etc., will continue to have far more effect on the Florida real estate market and home prices, than a few more people leaving leaving high tax states. Additionally, there are lots of people moving to Florida now that may swing the state to become one that favors more benefits which would require higher taxes. There is no guarantee that Florida will remain a “low” tax state. https://www.nbcnews.com/news/latino/puerto-ricans-could-transform-florida-politics-parties-are-taking-notice-n822051 Good luck Steve.
      _____
      Ron Stack “That Best Places Guy” of Zeus Press Inc

      • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.

      _____

  4. I was very intrigued reading this because although I am not a financial professional, I have always had a good sense of intuition. That being said, much of what was said here is exactly what I have been thinking for the last year or so. I am currently renting and have a plan in mind to buy a house once the market drops and I have been figuring that we are due for a possible substantial drop in housing prices in the next few years. So when that time comes, I will be ready to look to purchase.

    • The only problem with that is you’re losing money the longer you rent. Better to buy a home as soon as possible instead of throwing money away on rent that you could be using for a down payment on a house. I’m a former renter.

  5. Hello,

    I agree with a lot of what you are saying at seek your advice. I own a home for 15 years in Palm Beach county presently worth 350K and have no mortgage. My taxes are capped at $3,600 which is a great deal and makes it hard to move since my taxes will rise to $6,400 a year if I move.. The house I own now backs up to a busy road and hate the noise so i feel putting in a pool is waste.. Issue is – We need a bigger house with a pool. I think the market is heading down, my house is the least expensive in the neighborhood and when my house drops 50K the house I want to buy (same neighborhood) will drop 75K-90K as it did in the last downturn. My kids are 5 & 1 and really would like a pool, BUT I cant afford to make a bad decision. If I move now I double my monthly housing costs from $1200 to $2400 Question is – how long before you see a significant drop in prices? With the rising interest rates easing off, not sure if its getting crushed so quick

    • Hello Gary,
      It’s always better from a real estate value perspective to own the least expensive property in the neighborhood. If it were me, my initial though would be to consider the tax ramifications* and increased satisfaction of putting in the pool with spill over hot tub and incorporate a concrete-block-stucco wall for the portion of the pool cage that faces the noisy road to cut down on that negative some, if at the same time I could add living space to help with that “want”. The $21,000 I would save on the real estate commission by not selling my $350,000 place, plus the additional closing cost of selling and buying again, plus moving costs, which is all just purely money that’s lost because it doesn’t buy value, would go a long way towards paying for the project which would add value to your current home. It would be unwise to do this if you owned the most expensive place in the neighborhood.

      *My guess would be that the tax “cap” would remain and any increase in value would be taxed at the “homesteaded” rate, but I would verify this before I would do anything.

      You asked: Question is – how long before you see a significant drop in prices? With the rising interest rates easing off, not sure if its getting crushed so quick

      I will be publishing a new article early April 2019 concerning this.
      _____
      Ron Stack “That Best Places Guy” of Zeus Press Inc

      • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.

      _____

    • If you have a Homestead Exemption on your current house, you bring that with you to any future house. I spent a good hour on the phone with the Volusia County Appraiser’s office to understand how this all works (and I suggest you call your county appraiser’s office to confirm what I’m explaining). What they told me applies to the entire state of Florida, regardless of county:

      Say you bought a house for $100,000 and put a homestead exemption on it. Years later, you sell your house for $180,000. The price appreciation of $80,000 gets appled as a market value deduction to the next house you buy. So if you buy a house that’s $250,000, they will calculate your taxes by doing 250,000-80,000 = 170,000. So, the house will be valued at $170,000 not $250,000. Florida is unique in the way in this policy; I’ve never heard of any other state doing it this way.

    • Stay in the house you have now and save for retirment. You don’t need a pool you just want to have one, and that is something you can live without. Join a club, go to the pool and let the, to pay for the maintenance of it!

  6. I live in panama city beach, Florida, where we are having a boom of inflated home costs. We also have hurricanes and high insurance, and trees and dunes being torn down for massive amount of people moving here. Our wildlife such as birds, chayote, deer, bears etc. Are being killed. Things that made this area attractive is being wiped out. Homes are being built so fast the county dont even provide us with city sewer. My area is polluted with septic tanks. When it rains it floods due to lack of stormwater drainage. Governor Desantis has been no help.

  7. Ron – LOVED the article above “how is the Florida real estate market? Don’t buy a Florida house now”. Think you make some great points as I’m thinking along your same lines. I do have a few questions.
    When was your above article written/updated and does it take into account the 2020/21 Pandemic and thoughts of so many northerners moving to Florida with remote work options?
    Based on current pandemic real estate market realities as of March 2021 do you think better to buy now in Florida in this very overheated market or wait 2 years?
    My situation is my family will definitely be relocating to Florida gulf coast (treasure island/st Pete beach area) in 18/24 months—-so should I buy now as because of pandemic/post pandemic impacts and the overheated Florida market will continue to see rising prices ? (And try and rent the place out for next 18/24 months). Or postpone purchase for 18/24 months and buy when we are ready to move/live in full time and hopefully for me in 18/24 months the Florida market will experience the “correction” you expect in your article above? Or have the impacts of the pandemic on FL real estate market made you re evaluate your commentary about “don’t buy now in Florida” ?
    Would REALLY appreciate your thoughts /perspective. Thanks, Bill from NJ

  8. Ron – this is “Bill from NJ” again, a few of hours ago I posted a comment and asked you a couple of questions regarding the above posted article “how is the Florida real estate market/don’t buy now in Florida”.
    I then spent the next three hours reading almost every word of your website/blog; very insightful and I JUST PURCHASED YOUR BOOK (order #1493502597 google pay/Zeus press). Hope to hear
    back from you on my comment/question as referenced above.
    Also saw another commenter/ response from you (different article ) about how us followers could make sure we see/get your most updated articles/opinions. As you mentioned in your response a monthly recap email to a signed up cc list would be great (speaking for me id even pay a small monthly subscription price for a recap of your monthly/bi monthly moving to Florida updates).
    Thanks, Bill from NJ

  9. There is one factor not being considered in this article: inflation.
    Printing trillions to prop everybody up comes at a cost of Inflation as more money chases limited assets supply.
    Increase in inflation throws a wrench into all this analysis, and those waiting for better prices will see their purchasing power eroding at a faster pace.

    • Hello Eugene,
      Thanks for your comment. Here’s my opinion on inflation and the current Florida real estate market…

      1) Most people thinking of buying a home in Florida’s over-inflated real estate market today, already own a home somewhere else, so they already enjoy the “protection” of owning a real asset such as home, during a period of high inflation. The home just happens to be located somewhere other than Florida, which can be a good thing, and here’s why…

      2) As thoroughly explained in the Florida Move Guide, Florida’s real estate market has a history of booms and busts. During times when lots of people are moving to Florida, inventory sells down and prices go skyward. The current market boom in Florida is not the first time this has happened. These booms always come to an end. The real estate price bubble bursts and prices drop faster than they inflated. This happens during recessions (when not caused by pandemics with shutdowns and every American adult getting direct cash infusions to fight it), particularly bad hurricane seasons, etc. when the huge inflow of new residents to Florida almost completely stops, but the normal amount of people who moved there previously, found it was a mistake and want to sell and move out. This is when the real estate market in Florida experiences more sellers than buyers, and prices plunge. The last time this happened, prices in Florida dropped 40-60%. This happens in other states with highly transient populations such as Arizona, Nevada and California.

      Real estate prices have risen just about everywhere, but when this current market changes, the higher prices/home values will remain or just sag slightly in states that don’t experience huge in and out flows of residents. But if history repeats itself, the places that experienced the fastest increases will see the steepest drops. This is exasperated in Florida because so many people who move there, eventually decide it wasn’t what they thought. Just like it’s hard to sell a home when it’s worth more everyday, you want to sell now and preserve as much of that price/equity “gain”, as prices are dropping.

      So, will people who refuse to offer far more than what that Florida is listed for, or pay more than what the appraisal says that home is worth, be hurt by waiting until the market in Florida changes, while living in their current home that is increasing in value?

      If you want to erode your net worth, buy any asset (a home, stock, etc) at the top of the market and wait for the “correction”.
      If you want to erode your net worth and purchasing power, sell your home in a state with historically more stable home values, “invest” the proceeds plus take out a huge mortgage to buy a home at the top of the market by paying far more than list price, in transient population Florida, right before the market changes and prices drop.

      Again, thanks for taking the time to write Eugene, I love thought provoking comments.
      _____
      Ron Stack “That Best Places Guy” of Zeus Press Inc

      • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide. Avoid expensive mistakes.
      • Real estate in Florida is crazy priced
        I am 72 want to buy a home do I wait or buy now … southwest Florida

        • Only you know what your situation is, and your motivation for buying a home in Florida now, so it’s solely your decision. You are looking for insight, which is understandable. However, I’d be cautious about asking someone who would make $1000’s if you you buy now, or $0 if you wait, what you should do. Why? Because 99.99% of the time the answer you’ll get will be “you should buy now” (because it’s best for them? Simple math, $10,000 in their pocket if you buy now, or $0 if you don’t). That said, in my opinion, I think we are past the peak with the most recent data (this was written 8/26/2021) showing fewer sales and more listings in many areas month to month not only in Florida, but across the country. Sellers still have a very strong advantage over buyers, but… The Florida Move Guide details what usually happens next in FL.
          _____
          Ron Stack “That Best Places Guy” of Zeus Press Inc

          • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide. Avoid expensive mistakes.

Comments are closed.