We’ve been studying net domestic migration trends to help us explain supply and demand for housing in Florida. While demand is down compared to last year, it is still strong enough to equal supply which is keeping housing prices stable.
Reports conflict about which states are losing the most. One prominent news source lists New Jersey as losing the most, while many others suggest New York, Illinois, California, and Michigan. This could be because some are looking at percentages versus raw numbers, and others are studying data county by county. Suffice it to say, New York, Illinois, and California show up in just about every report we see.
Net Domestic Migration Trends
The other thing we look at is where are these people fleeing to. In most reports, Florida and Texas are the clear winners. We also see North Carolina, South Carolina, Georgia and Idaho.
With all these people moving to Florida, you would think we would have a supply imbalance. Inventory supply in SW Florida is holding steady after gaining in 2022 and early 2023. It is still rising, but minimally now. Pending sales are gaining weekly and meeting the supply.
Stabilized inventory could be a result of lower interest rates. Long term mortgage rates have fallen off their highs. Additionally, we are seeing the migration patterns continuing.
People forget these patterns were in place before Covid. Many think that Covid is what drove people to states like Florida and Texas. This is true. People did move here for the freedom and work from home atmosphere during Covid. However, after Covid people are continuing to move to Florida for the low crime and low taxes. Not only are we seeing individuals choosing to move here, we are also seeing entire companies relocating to more tax-friendly states.
When a company decides to move it is like a slow-moving train. It takes planning and time to move a company, and these plans can be in the works for years. When a company announces a move today, the plan may have been initiated more than two or three years ago, depending on the size of the company and logistics.
We do not see the trends changing anytime soon. Because Florida is a popular state, and because we have limited housing supply, our prices should remain relatively stable. The people able to make the move in the next few years should do better than those that wait.
We believe this for two reasons. Prices could keep escalating in Florida. Secondly, when enough people move out of the high-tax states, it leaves less people behind to pick up a larger share of the tax burden. Someday few will want to move to those states because the tax burden will be unbearable, and it could limit their ability to sell their homes at today’s prices. If they cannot sell their homes, some may stay and continue to suffer the high tax burden.
Southwest Florida should continue to do well. As we fill in, we expect more people to begin moving into central Florida and eventually the panhandle. Granted, the weather isn’t as nice as it is in SW Florida, but prices are less, and people may have to make choices if home prices stall up North.
Nationwide, we have housing shortage, so demand is up there with supply. The high tax states could continue to lose residents, and eventually this causes more funding stress, and the need for more taxes. It’s a loop that perpetuates itself, and it may not be good for real estate values in those states.
Bottom line is Florida is one of the places to be, and the sooner people make the move we think the better off they’ll be for the reasons outlined above. Of course, not everybody can move here at once. We don’t have enough supply and not everyone is in a position job or family wise to make the move at once.
Real estate values in Florida should fare well, even if the economy dips into recession. SW Florida home values have done well coming out of recessions in the past, and we see the demographics setting up nicely shout a recession occur again.
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