US Residents Flocking To Florida Send Rent And Home Prices Soaring
More people moved to Florida last year than any other state, helping to make the Sunshine State No. 1 in the country for fastest population growth for the first time in 65 years while fueling higher home prices and rents.
Florida’s population rose 1.9% between 2021 and 2022, topping all states for the first time since 1957, according to a report from the National Association of Realtors citing U.S. Census data. Domestic net migration in Florida reached 318,855 in 2022, nearly 100,000 more people than the 230,961 residents who moved to second-place Texas.
About half of U.S. states had more people moving in than out last year as the other half lost residents, according to the report. California had the biggest drop in net domestic out-migration, with 343,230 people leaving, followed by New York’s 299,557. Still, California remains the most populous state, with nearly 39 million residents statewide.
U.S. migration between 2021 and 2022 favored Sun Belt states, helping to attract considerable investment dollars to buy or build apartments during that time. However, overall apartment sales slowed considerably in the back half of last year because of higher lending costs associated with the Federal Reserve raising interest rates to tame inflation.
Migration patterns show people have followed jobs or sought affordability compared to big Northeast and Midwest cities as well as California cities such as Los Angeles and San Francisco.
“While there were net gains and losses, the country’s overall move rate was down from 2021’s historical low, continuing a six-year downward trend,” said Nadia Evangelou, the NAR’s senior economist, in the report.
Citing U.S. ZIP codes change-of-address data, Evangelou said 70% of ZIP codes had fewer people move in last year compared to 2021.
Metropolitan areas in Florida nearly all had positive move rates last year. Ocala, Florida, about midway between Gainesville and Orlando, topped all U.S. markets with a 57.1% move rate, which is calculated by dividing inbound moves by the sum of inbound and outbound moves.
Ken H. Johnson, a real estate economist at Florida Atlantic University, compared Florida’s growth to that of California’s in the 1950s and 1960s when the state’s population boomed after World War II as people sought good weather, jobs and housing opportunities.
“Earthquakes didn’t slow them down,” Johnson told CoStar News about California’s migration patterns more than half a century ago. “These days, newcomers to Florida face potential hurricanes, but that hasn’t seemed to quell their desire to move to Florida.”
Tallahassee followed Ocala for the highest inbound move rate and Charlotte, North Carolina, came in third. Orlando suburb Deltona and Miami were among the top 10, according to the NAR.
When accounting for pre-pandemic data, the Miami-Fort Lauderdale area led the country for the highest change of inbound moves between 2019 and 2022 at 56.2%. Annual rent growth in the Miami area hit record highs at the end of last March at 18.4%. Rent growth has slowed to 6.3%, which still is above historical levels.
Financial Firms Interested
Financial firms such as hedge fund Citadel, investment firms Goldman Sachs and Elliott Management and real estate investor and money manager BlackRock all set up operations in South Florida last year.
Renters in the Miami area are still paying a hefty 14.66% premium over historic rent increases of 3% to 5% annually, though it is slowly coming down, according to the monthly Waller, Weeks and Johnson Rental Index by researchers from FAU, Florida Gulf Coast University and University of Alabama.
Miami has dropped to third for highest premium behind the Cape Coral-Fort Myers and North Port-Bradenton-Sarasota markets. Cape Coral’s premium has stayed high in part because Hurricane Ian destroyed 5,000 homes and severely damaged another 13,000 at the end of September.
Unrelated to the hurricane, home prices began a steep rise in the Cape Coral area since the end of 2020, topping the country for highest premium buyers are paying at 62.29% more than they should based on historical averages, according to a separate monthly index by FAU and Florida International University.
Florida markets make up six of the index’s top 10. Hopeful buyers, however, may not see much pricing relief because of rents.
“Home prices won’t fall sharply because of high rents supporting current home prices,” Eli Beracha with FIU’s Hollo School of Business said in a statement. “Florida is a very difficult market to break into now unless you have a professional wage or the proceeds from a home sale in another state.”