1 big thing: Florida losing its luster

New Yorkers thinking of relocating to a Sunbelt state for better weather and more affordability might be in for a rude awakening as housing costs rise in popular southern markets.

Why it matters: New Yorkers’ steady southward migration in the last century has shaped Florida’s demographics and culture. Without the traditional financial incentive for moving, that era may be coming to a close.

By the numbers: Moving south—to Florida or, more recently, Texas—has long made sense to Manhattanites seeking a lower cost of living. Now, the numbers make a compelling case for staying put:

  • In 2023, people who moved to Miami, Austin, and Dallas saved almost 30% less compared to 2019. That’s about $37,000 in savings now vs. over $51,000 four years ago.

  • Inflation rates in these cities have started to catch up to those in New York, too—which also reduces the real purchasing power of these would-be expats.

  • Housing costs are peaking, too. In Manhattan, the last few years have seen a modest increase in rent and home prices. In Miami, housing costs have spiked almost 40%.

Is Texas the new Florida? New Yorkers have set their sights on Texas over Florida for a while now.

  • In years past, Florida was a magnet for those seeking to move south because of its sunny beaches and proximity to entertainment.

  • Texas’ popularity is a signal that people are selecting relocation destinations based on financial pragmatism instead of dream lifestyles.

Texas could be doomed to the same fate: Austin’s tech surge—fueled by an influx of Californians—is now starting to drive that Texas city over the affordability threshold.

  • Home prices in Dallas remain lower than in Austin, but its utility costs have risen over 50% since 2019.

The bottom line: New Yorkers eyeing properties in the South because they think they’ll save money should be aware that that financial trend is shifting. Increasing housing costs, rising inflation, and changes in the cost of living associated mean neither Florida nor Texas is a slam-dunk for savings.

2. Florida’s condo market cooling

Florida Land Trust
Photo: Herry Sutanto

The Florida condo market has been a hot commodity for homeowners and investors for decades. Thanks to increasing fees and other expenses, the market is showing signs of a rapid cooldown.

It’s just the condos: Sales of single-family homes in Florida are holding steady. On the other hand, condo listings linger—even as the rate of new condo listings continues to rise past historical averages.

What the numbers say:

  • Jacksonville and Miami are reporting condo prices down 7% and 3%, respectively, as of January 2024.

  • Sales of these condos are also declining—by 27% in Jacksonville and 9% in Miami.

Yes, but: Condo prices nationwide are on the rise.

What’s to blame:

  • Skyrocketing insurance premiums, thanks to the state’s regular, devastating hurricanes: In 2023, homeowner’s insurance in Florida spiked by about 40% (the highest rates in the US).

  • Exacting HOA rules and regulations that turn away buyers spooked by their overbearing approach.

  • Monthly maintenance fees: “Condos that used to have a $400 monthly maintenance fee may now have a $700 fee,” says Juan Castro, a Redfin Premier agent in Orlando. “It’s causing buyers to rethink their plans.”

New safety regulations enacted in the wake of the Surfside tragedy are also contributing to higher HOA fees for condos and periodic assessments.

  • And making it harder to secure a mortgage. Sometimes, getting a mortgage for a single-family home is easier than a condo.

The bottom line: If you’re a Florida condo owner, buyer, seller, agent, or mortgage underwriter, get ready for a period of adjustment.

  • Regulatory changes and rising costs are introducing significant hurdles that sellers and buyers must navigate.

  • No matter who you’re speaking to, on either side of the contract, you’ll need to recalibrate your strategies to stay relevant.

In this week’s Masters Series, I sit down with Asad Ahmad, CPA with the FitBiz CPAs to discuss his beginnings with the Big CPA firms and his pivot to opening his own firm that has grown to a bullet-proof tax strategies and fractional CFO firm focused on real estate investors and entrepreneurs.

Listen in or watch on your favorite channel.

3. Catch up fast

  1. FBI reports cybercrime reports hit all-time high, and losses increase to $12.5 billion in 2023. ALTA

  2. Jacksonville, Orlando, Tampa, and Miami are the 2nd, 3rd, 4th, and 6th hottest job markets in the U.S. WSJ

  3. And, speaking of Miami, Apple has inked a lease for a new 45,000 square foot office in Coral Gables. Refresh Miami

  4. U.S. average mortgage rates break the 7% barrier again. MPA Mag

  5. The CFPB is considering a ban on lenders requiring borrowers to pay for a lender’s title insurance policy at closing. Bloomberg (gift link valid for 7 days only)

  6. Can rehab loans replace hard money lenders? Bigger Pockets

  7. Congress will consider a bill to require the current tri-merge credit report rather than a new bi-merge (two reports) plan that the Federal Housing Finance Agency is currently considering. The bi-merge is expected to generate competition among the three major credit bureaus, lowering this closing cost for borrowers. HousingWire

4. Closing Thought

Fortunately, lightning didn’t strike twice. Photo: Joe Seagle

During last week’s severe thunderstorms that rolled through Orlando, the tallest live oak tree in our backyard was struck by a lightning bolt that hit the highest branch, traveled all the way down the tree, and then exited to the ground where it obliterated a poor bromeliad that was in its way.

We were watching “Below Deck” on Peacock when the strike blinked our power off, filled the room with intense white light, and a simultaneous thunderclap that shook us to our cores.

When the lights returned a second or two later, we had only a screensaver and no more “Below Deck.”

  • We also lost the two first-floor air conditioners, the cable modem, a network router, all backyard landscape lights, the irrigation pump, and the irrigation timer.

  • For days afterward, we were flipping tripped breakers and GFI’s.

For two evenings, our only Internet connections were through iPhones running on LTE cellular connections (the storm also took out our local 5G towers).

  • No television to bring us continuous images of bad news;

  • No bright screens to confuse our brains about whether it was day or night.

  • Less social media to remind us of everything everyone else is experiencing or distract us with cat/dog videos.

I got the best sleep those two evenings than I’d had in decades, or at least since I got my first iPhone.

  • We know that late-night screen time prevents a night of healthy sleep, but

  • It shouldn’t take a literal lightning bolt out of the blue to trigger a simple habit like turning off all the screens at least an hour before bedtime.

The next time a storm comes to town, I’ll cut power to the house, sit in the dark, and contemplate all the bad habits I’ve been resolving to break as the thunder rolls by.

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