- Housing affordability is falling, even for Florida’s wealthy buyers.
- Over the past five years home values in Florida have increased by nearly 69%.
- The amount of homes available for sale in Miami fell by more than half in 2021.
Elizabeth Hogan, the vice president of luxury sales at real estate firm Compass Florida, says she regularly works with millionaires looking to buy homes in Miami. She says her clients are typically attorneys, entrepreneurs, and mid- to high-level executives at established tech firms.
Currently, Hogan told Insider she has 37 clients interested in purchasing a home in the Magic City. But there’s a catch – there aren’t enough homes available for them to buy and not even the extra zeros added to their incomes are helping.
“This weekend, I had a customer from New York, who’s already been here on the ground, decide to continue home shopping through FaceTime because there’s such a lack of inventory,” Hogan told Insider. Although the buyer is looking for a home around $3.5 million, she says, he’s still grappling with affordability. Hogan says his story isn’t unique and fears Miami’s real estate market has become too expensive, even for her wealthiest clients.
Over the past five years Florida has not been exempt from the nationwide housing boom. Home values have increased by nearly 69%, according to Oakland-based fintech startup Roofstock. In 2021 alone, real estate investing database, Millionacres calculated that Miami’s median home price rose by 20% year over year, while the amount of homes available for sale fell 54.2%, according to real estate investment firm Norada. Hogan knows if additional homes aren’t built, housing affordability will impact all buyers regardless of their incomes.
“There’s a lack of inventory,” Hogan said. “There’s also so many new people moving to Miami that there’s just not enough property for everyone here. Not even if you’re rich.”
Florida has seen an influx of transplant buyers, many of whom come from expensive markets like New York and California.
In 2021, Florida welcomed 259,480 new residents, representing the largest growth in homebuyer migration in the country. In all, Florida’ population grew to just under 21.8 million in the 12 months ending July 1, 2021, according to Florida Politics. As Florida’s new residents seek housing, they’re snatching up available inventory and driving up home prices, putting locals in a precarious situation. Housing competition has become so tight that native Floridians are finding themselves priced out of the market.
“More than half of my active clients are either investors or people who are relocating, coming from places like California, Oregon, New York and New Jersey,” Cristina Llanos, a Redfin agent from Miami said in a report. Llanos says relocators are moving to Miami for affordability as other major markets become more expensive. Experts predict that Florida will lead the country in homeownership gains in 2022, which could mean affordability will become a top concern for the state.
“Unless incomes rise substantially for current residents, it is going to be hard for them to compete in this market,” Hogan said.
Florida’s real estate market has become so competitive that housing affordability has become a concern for buyers at all income levels.
“There is just a lot of competition for homes, so even if they can afford it financially, they are being beaten out by customers who are waiving inspections, financing contingencies, and offering free leaseback periods to sellers,” Hogan said. As a result, she is now advising clients to thoroughly understand conditions prior to entering the homebuying process, so they are prepared to make aggressive offers.
However, even with additional education, homebuyers still face difficulty as Florida just doesn’t have enough homes. Data from ONE Sotheby International Realty indicates that by the end of 2021, the number of available homes and condos for sale in Florida’s East Coast fell to roughly 17,300, marking the lowest level in recent history. Other parts of Florida aren’t shaping up well either as Norada claims it would take the state 2.2 months for the current inventory of homes on the market to sell, given the current sales pace.
As Florida continues to grapple with rising home prices and intense homebuyer migration, builders will need to introduce more homes to the market. If not, buyers at all income levels will face difficulty in the increasingly saturated market.
“It is all about supply and demand,” Hogan said. “If the inventory levels remain low, and people continue to move here, I believe the prices will continue to rise.”