Homes in Florida are so expensive, millionaires find it hard to buy
- Housing affordability is down, even for wealthy Florida buyers.
- Over the past five years, home values in Florida have increased by almost 69%.
- The number of homes available for sale in Miami has more than halved in 2021.
Elizabeth Hogan, 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 lawyers, entrepreneurs, and mid-to-high level executives at established tech companies.
Currently, Hogan told Insider she has 37 clients interested in buying a home in the Magic Town. But there’s a catch – there aren’t enough houses available for them to buy and even the extra zeros added to their income aren’t helping them.
“This weekend I had a client from New York, who was already here in the field, who decided to continue shopping from home via FaceTime because there is such a lack of inventory,” said Hogan told Insider. Although the buyer is worth around $3.5 million, she says, he’s still struggling with affordability. Hogan says his story isn’t unique and worries Miami’s real estate market has become too expensive for even his wealthiest clients.
Over the past five years, Florida has not escaped the national real estate boom. The values of the house have increases by almost 69%, according to Roofstock, the Oakland-based fintech startup. In 2021 alone, real estate investment database, Millionacres calculated that the median home price in Miami is up 20% year over year, while the number of homes available for sale fell 54.2%, according to real estate investment firm Norada. Hogan knows that if additional homes aren’t built, housing affordability will impact all buyers, regardless of income.
“There is a lack of inventory,” Hogan said. “There are also so many new people moving to Miami that there just aren’t enough properties for everyone here. Even if you’re wealthy.”
Florida has seen an influx of transplant buyers, many from expensive markets like New York and California.
In 2021, Florida welcomed 259,480 new residents, representing the strongest growth in homebuyer migration in the country. In total, Florida’s 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 search for homes, they hog available inventory and drive up home prices, putting residents in dire straits. Housing competition has become so tight that native Floridians are finding themselves out of the market.
“More than half of my active clients are either investors or movers from places like California, Oregon, New York and New Jersey,” said Cristina Llanos, a Miami Redfin agent. in a press release. report. Llanos says movers are moving to Miami for affordability reasons as other major markets become more expensive. experts to predict that Florida will lead the nation in homeownership gains in 2022, which could mean affordability will become a top concern for the state.
“Unless incomes increase significantly for current residents, it will be difficult for them to compete in this market,” Hogan said.
The Florida real estate market has become so competitive that housing affordability has become a concern for buyers at all income levels.
“There’s just a lot of competition for homes, so even if they can afford it financially, they’re being beaten by customers who forego inspections, fund contingencies, and offer free leaseback periods to sellers,” Hogan said. As a result, she now advises clients to fully understand the terms before entering the home buying process, so they are prepared to make aggressive offers.
However, even with additional education, homebuyers still face challenges because Florida simply doesn’t have enough homes. Data from Sotheby International Realty indicated that at the end of 2021, the number of homes and condos available for sale on Florida’s east coast fell to around 17,300, marking the lowest level in recent history. Other parts of Florida don’t look good either like Norada complaints it would take the state 2.2 months for the current inventory of homes on the market to sell, given the current pace of sales.
As Florida continues to struggle with rising home prices and intense buyer migration, builders will need to get more homes on the market. Otherwise, buyers at all income levels will face challenges in an increasingly saturated market.
“It’s all about supply and demand,” Hogan said. “If inventory levels stay low and people keep moving here, I think prices will keep going up.”