Sunshine State Scramble: Why Is Everyone Moving to Florida?

Why is Everyone Moving to Florida?

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It’s not just Grandma who’s moving to Florida these days.

People from all over the world are looking to buy a piece of property in the Sunshine State. In just the past year alone, Florida’s gained more than 200,000 residents, according to the latest census data, second only to Texas in population growth.

But as home prices increase by double digits across the state, rents skyrocket, and the bidding wars that flared up over summer 2021 continue to escalate, the Realtor.com® data team wanted to take a closer look at the metrics to see what’s really going on in the southernmost U.S. state.

Simply put, everyone is hot for Florida.

Florida has always been an attractive place to live with its warm weather, gorgeous beaches, no income tax, and relatively affordable home prices. It has, of course, long been a mecca for retirees: More than 3.5 million baby boomers have retired in recent years, and a good chunk of them are spending their golden years in a temperate paradise. But now, it’s becoming an increasingly popular destination for younger residents, too. More and more millennials who can work remotely are deciding to do so by the beach.

Meanwhile, conservative-leaning folks are deciding to leave liberal enclaves in California and New York for this red state in search of less restrictive COVID-19 measures and like-minded political views. Throw in some Wall Street investors looking to turn single-family homes into rentals, and you’ve got a perfect storm of increased demand with not enough homes to go around.

“The limited inventory is definitely driving the prices up,” says Lynn Charlas White, a broker associate at Coldwell Banker in Naples, FL, located on the Gulf Coast. “People are paying mind-boggling numbers, and it has no sense of slowing down.”

There just aren’t enough homes for buyers

Like the rest of the country, the number of homes for sale had been shrinking in Florida for a while. But starting in the spring of last year, the available inventory fell even more than in the rest of the country. So far this year, there are half as many homes for sale as there was the same period a year ago, as more people are moving to Florida than are moving out of the state.

“We’re seeing this ‘great reshuffle’ around the country, but the thing is that people in Florida are generally not leaving Florida,” says Kristine Smale, a senior vice president at building consultancy Zonda. Floridians who are moving are simply relocating to other parts of the state.

And while homebuilders are trying to keep up, they’re experiencing the same supply chain issues that are plaguing the rest of the country. Builders there are having to wait weeks for necessary items like doors, trusses, and large appliances.

“Even if it’s a week of delay time on each thing, it stacks up over time and that creates a compound effect,” says Mike Lombardo, a broker with Old Glory Realty in Cape Coral, FL.

Florida is starting to look less affordable

One of Florida’s biggest draws is its cheap real estate compared with other parts of the country. However, its affordability is starting to fade.

The median list price in Florida last month was about $434,000—significantly higher than the $392,000 national median list price, according to the most recent Realtor.com data.

As people fled the Northeast and Midwest throughout the pandemic, many came with cash. After selling their homes in expensive markets like the New York City suburbs and Chicago, folks found their money could go much further in Florida. And to stand out, buyers are offering six figures over the asking price in some cases.

Prices spiking in more affordable beach towns

Lifelong Floridians who have been priced out of expensive markets can now commute from more affordable metros, especially if they have to go into the office only once or twice a week. One example: More than 10% of people looking for homes in the Sarasota metro area were coming from Tampa at the end of last year, according to the latest Cross Market Demand report from Realtor.com.

“Sarasota is benefiting from the job growth from Tampa because it’s an easy commute, and some of the schools are better,” Zonda’s Smale says. “It’s an affordability issue as well.”

Downtown Sarasota, FL

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But prices there have jumped 39% so far this year compared with the same time a year ago, with the median list price reaching $547,500 last month. It’s even worse in Naples, a popular retiree haven, where the median list price was up nearly 60% over the same period and the median list price was $799,500 in February.

Renters aren’t having much luck either.

Out of the five metros with the largest rent increases in January, four were in Florida. The worst offender was Miami, where rents grew by more than 50% compared with the same time a year ago. The median rent there is now $2,895 per month.

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Barely Mentioned in Biden’s State of the Union: Rents Are Skyrocketing, Complicating Americans’ Ability To Save for a House

Black households homewnership

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When it comes to rental rates, it’s definitely not 2020 anymore.

Hardly mentioned by President Biden in the State of the Union address: The cost to rent a home is rising at the fastest clip in years, as landlords bounce back from their struggles earlier in the COVID-19 pandemic. For some households, the surge in rent prices will put homeownership even further out of reach.

Perhaps the closest Biden got to talking about the issue: “The pandemic has been punishing. And so many families are living paycheck to paycheck, struggling to keep up with the rising cost of food, gas, housing, and so much more.”

At another point in the address, Biden touched on the ramifications of rising inflation. “With all the bright spots in our economy, record job growth and higher wages, too many families are struggling to keep up with the bills,” he said. “Inflation is robbing them of the gains they might otherwise feel. I get it. That’s why my top priority is getting prices under control.”

Among the president’s priorities with the American Rescue Plan, Biden said he will endeavor to reduce energy and childcare costs for families, and provide more affordable housing. “All of these will lower costs. And under my plan, nobody earning less than $400,000 a year will pay an additional penny in new taxes. Nobody.”

However, unlike other policy proposals, Biden did not devote time in his speech to elaborate on his administration’s plans for reducing the cost of housing.

‘With all the bright spots in our economy, record job growth and higher wages, too many families are struggling to keep up with the bills.’

Joe Biden’s State of the Union speech

Making the rent remains a big challenge for millions of Americans. The overall median rent nationwide as of January was $1,789 per month, according to a new report from Realtor.com. That’s a 19.8% increase on the year. January was the eighth consecutive month in which rents rose on an annual basis by more than 10%.

And compared with the price of a two-bedroom home, rental appreciation exceeded home-price growth across every size of rental unit. The median rents for studio apartments rose 21%, while the cost to lease a one- or two-bedroom rental units rose 19.2%. Comparatively, the price to buy a two-bedroom home only increased 11% over the past year.

“U.S. rental markets are more than making up for lost time, with January data showing national rents continued to surge by double-digits over last year—and at a faster pace than for-sale home prices,” Realtor.com chief economist Danielle Hale said in the report. “So much faster, in fact, that even as monthly starter home costs increased in many of the markets that favored buying, rents for a similar-sized unit were 20% higher.”

In many cities, buying a home is more affordable

The Realtor.com report compared the cost to purchase a home with the cost of rent across the 50 largest cities nationwide. In 26 of these locations, buying a home was cheaper than renting. On average, buying a home in these areas was more than 20% cheaper than renting, in terms of the monthly expenses.

The best place to buy, rather than rent, was Birmingham, Ala., where households stood to save more than 44% on their housing costs if they bought a home. Realtor.com calculated the cost to purchase a home in each market by averaging the median list prices for homes of different sizes and assuming that the buyer brought a 7% down payment and had a mortgage charging 3.45% interest. The housing costs also factor in taxes, insurance and homeowners’ association dues.

In Austin, Texas, buying a home involved monthly costs that were 76% higher than the median rent.

Overall, most markets where buying was most affordable were “secondary” cities—locations with smaller populations, mostly across the South and Midwest. Other cities where buying was vastly more affordable than renting included Cleveland, Pittsburgh, St. Louis and Detroit.

At the other end of the spectrum, renters are the ones saving money in “Big Tech” cities. Austin, Texas, earned the dubious distinction in Realtor.com’s analysis of being the city where renting was the cheapest compared with buying property. Purchasing a home translated to a 76% higher monthly cost than renting there. Other cities where this was true included New York, San Francisco, San Jose and Seattle.

“For young Americans like Gen Z who may have moved home to save money during COVID, renting in a big tech city offers flexibility and relative affordability even as rents recover in these areas,” Hale said.

Black Americans stand to lose out as rents surge

The homeownership gap between white and Black Americans is growing, even as the overall homeownership rate has seen record increases. A new report from the National Association of Realtors found that the U.S. homeownership rate as of 2020—the most recent year for which data was available—stood at 65.5%, representing a 1.3% increase from the previous year.

But the homeownership rate among Black Americans was only 43.4%, and is still lower than its prior peak of 44.2% back in 2010. Meanwhile, the homeownership rate for Hispanic Americans hit 51.1%, surpassing the 50% mark for the first time on record. Among white Americans, the homeownership rate is above 72%.

“As the gap in homeownership rates for Black and White Americans has widened, it is important to understand the unique challenges that minority home buyers face,” Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors, said in the report.

“Housing affordability and low inventory has made it even more challenging for all buyers to enter into homeownership, but even more so for Black Americans,” Lautz added.

A variety of factors represent roadblocks for Black Americans looking to achieve homeownership. Half of Black Americans who rent spend over 30% of their income on housing—and over a quarter of Black renter households are severely cost-burdened, spending more than half of their monthly income on rent. Comparatively, only 20% of White renter households were severely cost-burdened.

‘Housing affordability and low inventory has made it even more challenging for all buyers to enter into homeownership, but even more so for Black Americans.’

Jessica Lautz, vice president at the National Association of Realtors

Income is one factor that explains these gaps. Based on median income alone, around 47% of white renter households can qualify to buy a home, according to the Realtors report, versus just 36% of their Black peers.

Additionally, Black households were far more likely to hold student-loan debt. This was true of two in five Black households, versus roughly one in five white households.

“This makes it difficult for Black households to save for a down payment and as a result, they often use their 401(k) or retirement savings to enter homeownership,” Lautz said.

So long as Black families face these and other barriers to homeownership—Black and Hispanic applicants are more likely to be rejected for mortgages than their white neighbors — they will not only be subject to surging rents, but also have fewer opportunities to grow their wealth.

An analysis from title insurance company First American found that the median homeowner has 40 times the wealth of someone who rents their house, underscoring how homeownership remains the primary path toward growing wealth for most Americans.

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Up, Up, and Away: Home Prices Reach a New Record High. How Long Can This Go On?

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The shortest month of the year managed to pack quite the punch for the housing market.

February saw the national median home list price climb to a new record high of $392,000, according to a Realtor.com® report. That hefty price tag is up an overall 12.9% compared with the previous year.

And while that double-digit percentage spike already sounds substantial, consider the fact that home prices have skyrocketed a full 26.6% compared with February 2020—right before the COVID-19 pandemic sent the housing market into overdrive.

This news couldn’t come at a worse time for buyers hoping to land an affordable home right now.

“Median home prices reached an all-time high in February just as mortgage rates surged to the highest level in almost three years,” says George Ratiu, senior economist at Realtor.com.

In effect, homebuyers are hit on two fronts at once, “compounding the squeeze on consumers’ budgets from inflation and making it harder for buyers to afford a home,” adds Ratiu.

Over the past six months, mortgage rates increased by an entire percentage point, with the 30-year fixed-rate loan averaging 3.89% for the week ending Feb. 24, according to Freddie Mac. This has raised alarm bells among buyers who believe they should get moving on their house hunt now, before rates rise even higher.

“Buyers today are feeling a sense of urgency brought on by both rising home prices and rising mortgage rates,” says Ali Wolf, chief economist at Zonda, a housing data and consultancy firm. “There’s this fear that if they don’t buy today, they may never be able to.”

Has the spring homebuying rush already arrived?

In addition to struggling with high home prices and rising interest rates, today’s buyers are facing a market where home sales are happening at an alarmingly brisk pace already. While January and February traditionally serve as a slow ramp-up to the bustling spring homebuying season, the housing market is already heating up.

Realtor.com data shows that homes sold in an average of 47 days in February. That breaks down to buyers scooping up properties 17 days faster than the same time last year, and 32 days quicker—more than an entire month—compared with February 2020.

So what does this mean for buyers looking to snag a home this March, or beyond? It’s going to be a pricey, competitive, and early spring homebuying season. However, there are signs of a thaw…

A ray of hope for homebuyers

Given rising home prices and interest rates, many homebuyers might think it’s not worth diving into the spring housing market at all. But Ratiu thinks that buying a home now, even in this feverish market, is generally a smart move for the long run.

“For people weighing their options, they should consider their time horizon and individual circumstances,” says Ratiu.

“If they plan to live in their current city for the next three to five years, leveraging current mortgage rates to lock in a fixed monthly payment, even at today’s higher listing prices, can provide a much-needed cushion in the face of rising inflation and rents,” he says.

There’s also a ray of hope peeking out from the darkness: While sellers were listing their homes at rates 13.8% lower than the average February levels seen in 2017 to 2020, the number of new listings increased in the month’s final two weeks.

“Buyers can expect to see an improvement in the number of homes for sale this spring, a much-anticipated development for housing markets,” says Ratiu. “A growing share of homeowners [are] ready to move with pandemic-delayed plans, indicating they plan to list their properties. As we gaze toward a post-pandemic spring in the months ahead, markets are likely to benefit from [a] higher supply of both existing as well new homes.”

Four metropolitan areas that saw an improvement in listings are Riverside, CA (+6.3%), Phoenix (+4.2%), Austin, TX (+1.5%), and Sacramento, CA (+0.3%), marking the first time since October 2021 that any of the 50 largest metros saw an increase in homes for sale. Metros include the main city and surrounding towns, suburbs, and smaller urban areas.

“While the national market remains competitive, there are cities where an influx of new construction, combined with a rising supply of existing homes, is leading to a rising share of price reductions,” says Ratiu. “In these markets, buyers may benefit from improved opportunities once the selling season gets underway.

“Finally, at long last, there is a glimmer of some welcome good news for buyers,” he says, “a sign that the overheated market of the past year is normalizing.”

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You’ll Never Guess America’s Happiest City in 2022

America's Happiest City

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The COVID-19 pandemic has prompted many Americans to move, and for good reason: We’ve learned, often the hard way, that where you live can have a dramatic impact on how happy you are. And in case you’re curious where the most blissful areas are hiding in the U.S., a new study points us in some surprising directions.

According to the 2022 Happiest Cities in America survey from WalletHub, people craving contentment should head west. California took the lion’s share of honors this year, with six cities nabbing slots in the top 10. No big shock there.

But the happiest city of all may indeed come as a surprise: Fremont, a city 44 miles southeast of San Francisco. In fact, Fremont has topped this list for the past three years in a row, says Jill Gonzalez, an analyst at WalletHub.

To come to these findings, WalletHub compared 182 of the largest cities in the U.S. looking at a variety of factors, including poverty levels, job satisfaction, work/leisure hours, divorce rates, and much more, that go into shaping our emotional well-being.

So why does Fremont fire up so much joy?

Inside America’s happiest city

Fremont California
Fremont, CA

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While not as renowned as San Francisco, Fremont boasts residents who are clinically blessed with a bright outlook, according to the data.

“Fremont has the second-lowest depression rate, at just 13%. Plus, it has a low number of retail opioid prescriptions dispensed and a high share of adults with good mental health,” Gonzalez says.

Environmental factors play a role, too, as measured in this study via proximity to public parks and length of commutes to work—that is, if residents are commuting much at all these days. Since Silicon Valley has led the charge on allowing flexible work-from-home schedules, Fremont residents may have benefited.

“Long commutes and traffic are happiness killers, so I hope that COVID has taught us that our workforce can be productive on a virtual or flexible schedule,” says Chip Espinoza, interim provost and dean of strategy and innovation at Vanguard University of Southern California and a WalletHub expert commentator.

Physical activity is also linked to happiness, so it’s no surprise that two of these top 10 California cities (Fremont and Irvine) rank in the top five in terms of sports participation rates.

“The amount of sunshine that California gets and the number of days you can venture out means it’s hard not to get to the great outdoors for some exercise, which is clearly important to mental health,” says Tony Mariotti, a real estate agent at RubyHome in Los Angeles.

Sunny, warm weather is another no-brainer path to peace, as is evidenced by the high rankings of Fremont, Irvine, and San Jose, as well as two cities in Hawaii: the capital, Honolulu, and Pearl City, also on the island of Oahu.

And although it seems like every Hollywood A-list couple breaks up regularly, four California cities prove this trend to be dead wrong. Fremont, Glendale, Irvine, and San Jose feature the lowest separation and divorce rates in the survey.

Now some unhappy news: All those glorious days in the California sun come at a cost, with homes prices here being among the highest in the country.

Due to this expense as well as high taxes, “the narrative during the pandemic has been that people are leaving California in droves,” admits Mariotti. Still, he considers the “sunshine tax” to be one worth paying.

More surprising happy cities

But don’t worry: If sunny climes and high home prices aren’t your speed, other sections of the U.S., from the Midwest to the East Coast, have a top city to suit just about every kind of homeowner.

Other parts of the country also fare well on the happiness scale—including Columbia, MD; Overland Park, KS; and Madison, WI—thanks to high marks in the physical and emotional health categories as well as their environment and community spirit.

Happiest cities in America

  1. Fremont, CA
  2. Columbia, MD
  3. San Francisco, CA
  4. San Jose, CA
  5. Irvine, CA
  6. Madison, WI
  7. Seattle, WA
  8. Overland Park, KS
  9. Huntington Beach, CA
  10. San Diego, CA

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Fannie Mae and Freddie Mac Contribute Over $1 Billion To Help Increase Access to Affordable Housing

Fannie Mae and Freddie Mac

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Mortgage giants Fannie Mae and Freddie Mac are upping the ante when it comes to affordable housing.

The Federal Housing Finance Agency, which regulates Fannie and Freddie, said Monday that the two enterprises will contribute nearly $1.14 billion to the Housing Trust Fund and the Capital Magnet Fund. It’s the largest amount that Fannie and Freddie have ever provided.

“Today’s announcement of record funding for additional housing production will help increase access to affordable, sustainable housing options,” said Sandra Thompson, the FHFA’s acting director, in the announcement. All told, Fannie and Freddie are contributing nearly $45 million more this year to the two funds than they did in 2021.

The Housing Trust Fund is overseen by the Department of Housing and Urban Development and provides grants to states and other state-designated entities to promote the production and preservation of affordable housing. The Capital Magnet Fund is overseen by the Treasury Department and awards its money in grants to community-develop financial institutions and nonprofit developers.

Fannie and Freddie’s larger contributions come at a time when an overall shortage of housing nationwide is being blamed for rising home prices and rents. A recent study co-authored by Harvard economist Lawrence Summers projected that housing inflation could increase to 7% this year as a result. Housing inflation only amounted to around 4% for the 12 months ending in January.

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