Florida has been synonymous with scoring real estate. Natural disasters and climate change have done little to make the Sunshine State a less desirable destination for practically everybody. Its enchanting appeal to students, retirees, entrepreneurs, workers, tourists and snowbirds has made its local real estate markets vibrant and profitable.
Will Floridian locations and properties remain attractive in the coming months? Learn about the most noteworthy trends to set your expectations for the peninsula’s residential real estate sector.
1. Fewer Homes Are Changing Hands
The Land of Flowers saw 26,363 homes sold in December 2023, representing a 5.4% dip year-over-year. Regarding single-family houses, the downtick was only 3.9%. However, the demand for townhouses and condominium units fell by 8.8% and 10.7%, respectively.
The December figures may be bearish, but homebuyers were more bullish on Florida compared to the rest of the United States. Existing home sales dropped by 19% nationally in 2023 — the lowest in 30 years.
The Florida residential real estate sector is showing signs of cooling off since home sales peaked at 52,147 in March 2021. It was a relatively steady decline. Monthly home sales in 2023 didn’t cross the 40,000 mark.
2. Buyers Are Paying Top Dollar
The Cirtrus Capital’s all-transactions house price index jumped 4.95% in Q3 2023 year-over-year. This data combines appraisal figures and sales prices, reflecting professional appraisers’ opinions and homebuyers’ sentiments.
Although fewer homes are getting sold in Florida, it’s reassuring that buyers are ponying up more money to make the state their home. This figure suggests sellers still control the markets and bidding wars remain fierce.
Historical data says this trend won’t run out of steam in the future. Only one quarter saw this metric drop since Q3 2012. Gaining a foothold in the Gulf State’s real estate market sooner rather than later is ideal. Barring housing bubbles, property appreciation is practically a foregone conclusion.
3. Property Values Are Skyrocketing
Florida has overtaken New York as the second-most valuable residential real estate market. According to a September 2023 Zillow report, the Tropicana State’s total housing market value exceeded $3.8 trillion — up 4.3% since June 2022. Regarding the average home value, the figure is $383,063 — 8.2% higher year-over-year.
Florida metropolitan areas are on a roll. The Miami–Fort Lauderdale real estate market is worth $1.2 trillion — the sixth-largest among metros nationwide. Four of the six housing markets with the highest gains in value since the pandemic are in the state. They’re Tampa, Miami, Jacksonville and Orlando, growing by 72.3%-88.9%.
The Empire State is only $156.5 billion behind Florida. However, New York is trending downward. The Gateway to the West is losing people, while the Orange State has more in-movers than out-movers. Actually, Florida is the destination of those emigrating from the Knickerbocker State.
4. More Energy-Efficiency Projects Are Underway
Residential and commercial property owners in the Everglade State actively tackle green improvements, thanks to Florida PACE — Property Assessed Clean Energy. On average, the state’s energy conservation and hurricane protection funding agency helps finance 2,132 projects yearly, spending north of half a billion dollars from 2015 to the first half of 2023.
The PACE program comes with a reasonable payment plan to make typically unaffordable repairs, upgrades and replacements more manageable. Hundreds of projects qualify for it, giving Floridians considerable latitude in making their properties more climate-resilient, code-compliant, sustainable, comfortable and valuable. Many prioritize window upgrades because about 30% of heat loss within the house occurs through leaky and thermally underperforming fenestration units. Getting a new exterior door, roof or generator is high on others’ agendas.
Florida PACE also makes decarbonizing air conditioning by installing a heat pump budget-friendly. This electrification project costs about $18,000 in the South Atlantic. A funding source with no money down and no credit checks is desirable.
5. New Foreign Players Are Bidding
South Florida has been a magnet for international residential real estate buyers. In 2023, foreign nationals bought 6,200 homes worth $5.1 billion. It’s down 25% year-over-year, but the downturn spoke more of the overall housing market than of the interest from non-domestic players. International buyers retained 18% of the region’s total deal volume.
The vast majority of South Florida residence hunters are from Latin America. The Columbians are well represented, accounting for 15%. The Argentines and Brazilians comprise 14% and 7% of investors, respectively. The rest are from Venezuela, Mexico, Peru, Chile and Ecuador.
Canada is an outlier. Based on anecdotal evidence from real estate brokers, many buyers with deep pockets from the Great White North are shopping around South Florida while flying under the radar. These loaded Canadians are taking seven-figure properties off the market — a rare sight before the pandemic.
The Canadian invasion of South Florida may just be getting started. Developers are taking notice and recalibrating their marketing strategies to generate more business from loaded buyers north of the border.
6. Rent Prices Are Stabilizing
Rents in some Florida metros are falling. In December 2023, Jacksonville and Cape Coral landlords charged 0.29% and 0.17% less year-over-year, respectively. These cuts were negligible but might be psychologically beneficial to aspiring tenants.
Still, rents across the Flower State are at a premium. In the same month, Miami recorded the most inflated one, which was 6.23% more expensive than it should be. It translated to a 0.11% reduction month-over-month, though.
On the bright side, five Florida metros in the Waller, Weeks and Johnson Rental Index were below the national rent premium average of 2.58%. Four were less than 2% away from matching their estimated reasonable rent prices. Jacksonville rents were even discounted by 0.10%. In other words, you could earn $68,548.09 and live in Jax without 30% of your annual income on rent.
Unfortunately, rent prices in said metros may spike once more tenants simultaneously search for homes. Florida gives landlords the privilege to set rents without restrictions based on demand.
Trends Come and Go
Some Florida trends must be music to the ears of investors and home sellers, while others may sound terrible news to buyers and renters. That’s just the nature of the beast. For better or worse, real estate markets are cyclical and conditions will eventually be more favorable for the other parties.