Despite a fluctuating national housing market, Florida’s real estate scene continues to thrive. While rising mortgage rates and inflation are impacting purchasing power, the Sunshine State remains a magnet for both residents and businesses.
Florida holds the title of the largest housing market in the US, boasting nearly double the number of home listings compared to California, despite having a smaller population. This strong market is attributed to its attractive tax advantages, pleasant weather, and robust economy, drawing people from across the globe.
While coastal condominium prices are facing downward pressure due to high insurance costs and assessment fees, single-family homes in inland areas remain steady. Recent data from Redfin shows that the median sale price of a home in Florida rose 2.3% year-over-year to $419,200, slightly below the national median of $426,900. Although this represents a decline from the peak in April 2024, prices remain near record levels. Despite this, the number of homes sold decreased by 14.1% while inventory increased by 16%.
While Florida’s appeal as a post-pandemic haven remains strong, factors like expensive homeowner’s insurance due to hurricane risks, rising home prices, and increasing property taxes are beginning to deter some potential buyers.
Commercial Real Estate: A Bouncing Back Market
After a challenging 2023, the national commercial real estate market is poised for a rebound in 2024 as the Federal Reserve is expected to cut interest rates. However, the office sector remains troubled, with falling lending activity, rising vacancy rates, and increasing delinquencies. The office vacancy rate nationwide reached a record high of 13.8% in February. Leasing activity, a key indicator of demand, has dropped significantly below pre-pandemic levels.
Other commercial real estate segments are showing signs of recovery. Multi-family is rebounding from lows, retail spaces are experiencing a slowdown, and the industrial sector is showing signs of slowing down.
Florida cities like Orlando, Jacksonville, and Tampa are witnessing a sharp increase in industrial space rent due to strong demand for warehouse properties. These increases are reaching 10% from last year.
However, there is a potential risk looming. The low financing costs currently available to buyers might soon become a thing of the past. Many commercial property loans are set to mature later this year and in 2025, amounting to a staggering $1.5 trillion in commercial real estate debt. The terms for new loans or refinancing are expected to be tougher.
Florida: A Magnet for Businesses
Corporations, especially in the tech sector, are increasingly turning their attention to Florida, with many making the move from traditional hubs like Silicon Valley and New York. Citadel and Citadel Securities have permanently relocated their headquarters to Miami. Amazon founder Jeff Bezos has shifted his base from Seattle to Florida, citing his space venture Blue Origin as the driving factor. Defense contractor Lockheed Martin has moved its Space division headquarters to Titusville, Florida. JPMorgan has significantly expanded its presence in the state, doubling the size of its downtown Miami office to accommodate 400 additional employees.
Florida’s strong economy, low cost of living, particularly in northeast Florida, and its appeal to remote workers are key factors driving this business migration.
Potential Beneficiaries
With industry experts and watchers bullish on Florida’s housing and commercial real estate markets, companies operating in these sectors stand to gain significantly. This includes commercial real estate services and investment companies like CBRE Group, Inc., Jones Lang LaSalle Incorporated, and Cushman & Wakefield plc. Homebuilders like Lennar Corp., M/I Homes, Inc., LGI Homes, Inc., and Meritage Homes Corporation are also well-positioned in the state. Utility companies operating in Florida, including NextEra and Duke Energy Corporation, are likely to benefit from the continued growth in the state.
