Florida Real Estate Market: Busting or Adjusting?
Real estate “experts” will have their subscribers believe that Florida home prices are plummeting, that investing in Florida real estate will amount to nothing but catastrophe. Many are even referring to this lapse in skyrocketing appreciation rates as a “crash.” But all the factors that contribute to a booming real estate market are still present, leaving no chance for a “Grapes of Wrath” future in store for Florida. Real estate investors have simply stopped looking to Florida because the market’s exorbitant prices are making middle-class investment less attainable.
Recent studies have yielded a more positive view of the appreciation rate decline, uncovering evidence that real estate in Florida will be affordable once again. All the elements of a healthy real estate market are already set in place—an increasing job market, an influx of both domestic and international immigration coupled with high fertility rates, declining mortgage interest rates, and a lack of undeveloped land—that make a robust real estate market inevitable.
Florida’s population over the last half century has grown at a phenomenal rate due to both foreign and domestic migration. Since 1970, Florida has grown at over three times the rate of the entire nation. The population surge in the 1980s alone was higher than the total number of Florida residents in 1950. The growth rate of Florida’s foreign-born population is double that of the state’s overall increase rate, but still falls behind the rapidly expanding population of domestic migrants.
Between 1980 and 1990, Florida had a 57% increase in its foreign-born population and the foreign-born population increase of 70,000 people between 1990 and 1995 accounts for 30% of the state’s total population growth. Florida’s current population is approaching 18,000,000, an 11% rise just since 2000 and shows no signs of slowing down. In fact, a 1995 study predicted that by 2015 Florida would surpass New York as the third most populated state in the nation, whereas a current study accelerates this prediction to occur by 2010, indicating that Florida is growing much faster than experts could have predicted.
With over 70,000 immigrants entering Florida legally each year—predominantly from Latin American countries Cuba, Dominican Republic, and Columbia and Asian nations of India and Vietnam—the international migration rate is the third highest in the nation. The particular ethnic makeup of Florida’s immigrant population also yields the highest fertility rates in the nation, causing the state’s population to skyrocket. In 2004, Hispanic women had by far the highest birth rates in the nation, comprising 98 out of each 1,000 births while Asian women ranked second at 67 per 1,000 births. The rapid influx of immigration from fertile ethnic groups indicates a growth rate that will continue for generations to come.
Domestic migration also accounts for a dramatic rise in Florida population as it boasts the highest populations of senior citizens in the nation and current studies show that the state is the most popular in the nation as a retirement spot. A recent U.S. Census study predicts that beginning in 2011, the population of senior citizens will grow faster than the total population in every single US state with a quarter of all Floridians being 65 and over. The year 2011 coincides with the year that the oldest of the baby boomer generation become senior citizens. The largest generation in US history, their presence in the retirement population that ranks Florida the top choice will undoubtedly contribute to a massive rise in senior citizen population.
With the influx of retirees comes the need for a strong medical industry, thus adding more job opportunities for health care professionals in Florida’s already formidable job market. A recent study by Bizjournals found Florida’s Cape Coral- Fort Myers area to be the strongest job market in the country, boasting 230,000 jobs. Also in the study’s top ten are Lakeland, Sarasota-Bradenton, Orlando, and Miami-Fort Lauderdale, giving Florida five out of the top ten job markets in the nation. Florida also has the lowest unemployment rate and the fastest job growth rate of the country’s ten most populous states.
With a steadily climbing job market and an influx of new residents to fill each position, it is highly unlikely that Florida’s status as a thriving state will falter. Even as many of these “experts” panic over their so-called “Florida real estate bust,” others are looking to the depreciation as a positive. Residents welcome the lower prices, citing an alienation that they felt during the investor speculation driven boom with people who did not even live in the state driving property prices to unaffordable levels for locals.
Now that prices are dropping, Floridians can get a higher quality property for a reasonable price and the lower rates will cause more people to take advantage of the abundance of jobs in areas that they would not have been able to afford mere months ago. The state has high potential for lucrative long-term investment as Florida’s growth will incite a gradual home value appreciation without driving out residents with more modest incomes. And many industry professionals see the softening as a positive, a way to cleanse the market of incompetent bandwagon developers and the speculators and flippers who were driving market prices to unaffordable highs.
