People are flocking to the ‘Sunshine State,’ driving up the price of real estate in many popular towns. Once a relatively affordable place to enjoy abundant sunshine and warm temperatures year-round, property values have risen significantly in recent years.
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For example, the average Florida home value is currently $399,944, compared with $249,725 in January 2020, according to Zillow.
Desiree Avila, a board-certified realtor with Charles Rutenberg Realty, who specializes in South Florida, said the marked increase in home values in her area is due to both domestic and international migration to the state, as well as low interest rates during the COVID-19 pandemic.
“These migrations have been a force in maintaining a strong demand in South Florida for real estate and part of the reason cities like Miami and Fort Lauderdale have become less affordable over the past few years,” she said.
“The other part of the equation is that 2%-3% interest rates during COVID, spurred buying and further pushed prices upward.”
She doesn’t expect things to drastically change anytime soon.
“Despite the Fed raising interest rates to record highs the value of houses overall has not come down to pre-COVID levels,” she said. “And I don’t think they ever will, although right now they are faltering.”
Current interest rates have forced many buyers to decrease their budget, she said.
“The buyer that could afford $650K during COVID may only be able to afford about $400K today,” she said. “A $400k house today is not a $400K house in 2019.”
If you’re thinking about buying a house in Florida, you may want to steer clear of cities with rapidly rising real estate prices. Here’s a look at five Florida cities that are becoming unaffordable, according to Colten Claus, associate broker at 8z Real Estate.
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Miami
“Miami’s real estate market has seen significant price increases due to its appeal as a cultural and financial hub,” said Claus. “The influx of new residents and investors has driven up home prices, making it challenging for average buyers to afford property here.”
Chic and fun, the city has a widespread appeal, which has become evident in its rising housing prices.
“Those of us who live in South Florida often say that Miami is the ‘Capital of Latin America,’ because it is a microcosm of the Caribbean and Latin America,” Avila said.
“Many of those that immigrate from Caribbean and Latin America, sometimes because of the tenuous state of their home country’s economy, bring lots and lots of money to invest in real estate.”
She said finding a habitable $400,000 house in Miami has become nearly impossible.
“Many people that have called South Florida home are moving to other Florida cities further north or out of state altogether, where they can afford housing that is commensurate with what they can afford and their standard of living.”
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Orlando
“Orlando’s booming tourism industry and growing job market have led to a surge in housing demand, pushing prices higher,” Claus said. “The city’s popularity as a destination for families and retirees adds to the competitive market.”
On the flip side, he noted that Orlando residents face issues like high property taxes, seasonal traffic from tourism and the threat of hurricanes. These problems are definitely something to consider before moving to the area.
Tampa
“Tampa’s growing economy, particularly in the tech and healthcare sectors, has attracted many new residents, resulting in rising home prices,” Claus said. “The city’s waterfront properties are especially in high demand, further driving up costs.”
Even if you can afford a home in Tampa, he noted that high property insurance rates — due to hurricane risks — and the increasing cost of living are something to consider.
Fort Lauderdale
“Fort Lauderdale’s appeal as a coastal city with a vibrant nightlife and boating culture has led to significant increases in home prices,” Claus said. “The luxury real estate market here is particularly hot, making it less affordable for average buyers.”
Avila said many Miami residents have moved to Fort Lauderdale. She noted above that finding a habitable $400,000 house in Miami has become nearly impossible, and said this trend is now spreading to the Fort Lauderdale area.
“If a $400K house goes on the market in Broward and it is desirable, it doesn’t last, because it gets scooped up very quickly,” she said. “Single family homes in this price range are a dying breed.”
Naples
“Naples is known for its upscale living and beautiful beaches, attracting affluent buyers,” Claus said. “The limited housing supply, combined with high demand has resulted in steep home prices, making it unaffordable for many.”
If you’re thinking of movie to Naples, he advised taking the high cost of living, limited availability of affordable housing and the risk of hurricane damage into consideration.
Please note average home values were sourced from Zillow as of June 30, 2024.
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This article originally appeared on GOBankingRates.com: I’m a Real Estate Agent: These 5 Florida Cities Are Becoming Unaffordable
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