Florida has always been an attractive place to live, but people all across the country started taking extra notice of this during the pandemic. Fueled by a desire to spend more time outdoors, residents of other states began to flock to Florida in droves, according to The Property Advocates.

The U.S. Census Bureau reports that the Florida population is growing faster than all other states except Texas. From 2020 to 2021, about 300,000 people moved from another state to Florida.

The sunny weather, great neighborhoods, and no income tax and affordable property taxes are all reasons Florida is so attractive. Yet, because of this, the state is becoming more expensive by the day.

Demand Fueled Spike in Home Prices

The demand for housing in Florida is far outpacing the available supply. As any economist will tell you, that is a recipe for a price increase.

While people were flocking to Florida during the pandemic, the housing construction industry suffered immensely. Projects ground to a halt; some are only picking back up again now. That caused a massive shortage of available homes.

As a result, the average sales price of a Florida single-family home by the end of 2021 rose to $348,000, which was a year-over-year increase of 20%.

Interest Rates and Prices Don't Match Up

One of the federal government's responses to the pandemic was to drop interest rates to near-zero levels. That made mortgages in the last few years the most affordable they've ever been.

With low-interest rates, home ownership, in turn, became more affordable for more people. Even though home prices were rising, the low-interest rates were offsetting those higher property costs.

Things have quickly turned the other way in the last year or so. The federal government has been aggressively raising interest rates to try to stave off inflation, which has caused the cost of mortgages to rise precipitously.

While home prices are starting to fall a bit in Florida over the last few months, they aren't dropping at the same rate that mortgage interest rates are rising. In essence, this is causing a perfect storm for prospective homeowners, with higher-than-normal home prices coupled with higher-than-normal interest rates.

Inflation Rates are the Highest

It's not just the fact that more people have been moving to Florida since the pandemic; it's the type of people who moved here. The Property Advocates points out that Florida was the new home destination for more high-earning individuals and families than any other state -- nearly quadruple Texas, which ranked in second place.

Because of this, the Consumer Price Index has risen higher in Florida than it did anywhere else in the country. In fact, the top two metropolitan areas where inflation increased the fastest over the last year were both in Florida.

Miami-West Palm Beach-Ft. Lauderdale saw its inflation rise by 9.9% in that timeframe, while St. Petersburg-Tampa-Clearwater saw its rise by 9.6%. 

Those high levels of inflation, combined with high housing prices combined with high mortgage interest rates, are making Florida more expensive by the day.

About The Property Advocates

The Property Advocates, P.A. is a full-service Florida insurance law firm specializing in property insurance claims. With offices in Miami and Tampa, The Property Advocates team consists of nearly 14 experienced attorneys with decades of combined experience who are compassionate, knowledgeable, and not afraid to go to trial for their clients. They have a successful track record of resolving complicated property insurance claims and getting their clients the fair compensation they deserve.