While the COVID-19 pandemic has changed the economy and the real estate market, Florida's housing market continues to stay strong with an influx of new residents. Here's what else you need to know about home values and trends.
- Northerners have been flocking to Florida to buy homes
- Key factors pushing Florida real estate along include:
- Tax advantages
- Lower U.S. mortgage rates
- Larger homes and more space
- Better weather
- Work with an attorney if you have questions
Americans began flocking to Florida following the start of the COVID-19 pandemic, and reports show the bulk of these new residents are from Northern states like New York and New Jersey. Moving to Florida has many benefits for homeowners, including more space, getting away from an urban setting, tax benefits, and a lot more sunshine throughout the year.
But have home sales actually increased? What about home values? We will be walking through what has changed in Florida according to the latest data and how it may be impacting Florida home values and property purchases in the state.
Why are there so many new residents in Florida?
Many counties saw major rises in new home contracts over the last year, some even doubling. For example, Palm Beach County saw a 268% increase in contracts over $1 million for single-family homes.
Across the state, the population is estimated to have grown by over 340,000 in the past year, and the total population is nearing 22 million residents. It is also estimated that around 950 people are moving to Florida every day, and nearly half of those people are moving to Southern Florida.
As more Americans have been staying home because of the pandemic, people want bigger spaces to spread out and better weather, so they can take enjoy outdoor activities all year. Many families want better home offices and other home amenities like a pool or gym.
Other reasons people are moving to Florida are the significant tax advantages. Florida residents do not pay any state income tax or estate tax. There is also a homestead exemption of a maximum of $50,000 for primary residents, in addition to a home assessment cap of 3% annually.
These tax advantages make it easier for Florida homebuyers to cover the cost of homeowners' association fees.
In addition, the Tax Cuts and Jobs Act of 2017 limited the total state and local taxes that can be deducted on a tax return to $10,000, so buying a Florida home has become even more appealing for people in other parts of the country.
With the influx of new homebuyers in Florida, there has no doubt been an impact on home values. Here's a look at what's changed in sales and values.
How have Florida home sales and values been impacted?
The Florida housing market slowed a bit in the second quarter of 2020 when the pandemic restrictions were first implemented. In April and May, there were higher median prices, fewer closings, and fewer new listings on the market when compared with the same period in 2019.
But, as mentioned, over the last year sales started to go up and, in many areas, more than doubled during the pandemic.
Data from Florida Realtors comparing the fourth quarters of 2020 to 2019 shows that there has been almost a 24% increase in closed sales for single-family homes in Florida, with an average sale price increase from $346,204 to $441,645.
So, even while the market was initially uncertain as the pandemic began, home sales have since continued to increase in the state.
Home values in much of the state have increased: Palm Beach County has an average of 5.9% increase and Broward County's average is 6.1%.
In many cities, the property tax rate has stayed the same, even with rising home values.
But in some areas, the demand is too high for the inventory. In Boca Raton, for example, people are engaging in competitive bidding wars. In nearby gated communities in Delray Beach, Parkland, and Coral Springs, homes are selling for $600,000 to $700,000.
Across the state, the average home value is $270,560 and has increased 8.6% over the last year. Comparatively, the median listing price in the U.S. was $340,000 at the end of 2020, an increase of 13.4% compared to the year prior.
Lower mortgage rates
Another trend that is pushing more Americans to purchase homes across the country is the low mortgage rates seen after the pandemic took hold and shifted the economy in 2020.
As 2020 began, no one could have predicted what was to come. The mortgage rate was expected to stay around 3.8% according to most estimates. Instead, the rate dropped and many Americans have sped up their plans to buy a home before it rises again.
Throughout 2020, the mortgage rate fell below 2.6%. Compare this number to the 5% and 6% rates that were seen within the last two decades.
As of mid-February 2021, the rate for a 30-year fixed mortgage was averaging 2.81%.
These lower mortgage rates could be contributing to the increase in home sales in Florida, as Americans from across the country are taking advantage of the combined benefits of moving to the state: better weather, more potential for a larger home, tax advantages, and low mortgage rates.
Work with PeytonBolin for your real estate needs
If you have questions about the current housing market in Florida, or are considering purchasing a property, it is always wise to talk to a professional who can walk you through the process.
At PeytonBolin, our board-certified attorneys are committed to helping a wide range of clients with buying and selling homes, HOA law, hurricane insurance, and real estate litigation. We can help you understand what tax laws and current interest rates mean for your plans, helping you set up the right strategy for your future.
Contact our team at PeytonBolin to learn more about how we can assist you with any real estate matters.