South Florida has been making headlines recently for its impressive housing market growth.
The most recent data from Zillow shows that out of the 100 largest US metros, the Miami/Fort Lauderdale area ranks #5 in year-over-year average rent price increase (+24.71%). They also rank #5 for YOY median sales price increase at +23.34%.
As a result of these surging prices, Miami’s income to housing cost ratios are now as high as some of the most expensive markets in the country. As a result, some industry experts are predicting the South Florida housing market to cool in 2022.
|Median Sale Price
|Average Rent Price
While it’s unlikely that South Florida will sustain the same price growth margins as last year, there’s plenty of evidence that suggests the metro’s market momentum may push through 2022.
Here are five reasons why South Florida’s housing market will stay hot in 2022:
1. Migration Patterns
It’s no secret that people have been flocking to Florida at a faster rate in recent years. The most recent migration data from the US Census and United Van Lines has confirmed those rumors. In United Van Lines’ 2022 Migration Report, Florida led the nation in both inbound move percentage (62%) as well as total inbound shipments.
|2021 % of Inbounds Moves: United Van Lines
Since the pandemic began, this migration pattern has been accelerating. Florida’s low cost of living, incredible weather, and less restrictive environment has attracted many fleeing the soaring rents and strict mandates typical of northeastern states. The remote work revolution has also contributed to South Florida’s growth, affording many telecommuters the ability to work from a warm climate with no state income tax.
2. Google Trends Data
Some may think that South Florida’s rapid home price growth and lower median income will disrupt this migration trend and deter relocators from moving to South Florida. The most recent data from Google suggests otherwise.
Google trends search volume data illustrates that people searching for homes in South Florida are at all time highs. This is especially true of South Florida’s northern suburbs. Look for home prices in north Broward and West Palm Beach counties to accelerate faster than the more densely populated South Broward and Dade counties in 2022.
Another very interesting trend uncovered in Google’s data is where these searches are taking place. A sizable portion of the people searching these terms are from northeastern states. This also backs up the narrative that people are fleeing the northeast for southern states.
3. VC Funding
When a metro area begins to attract larger amounts of venture capital, the effect on the housing market can be enormous. Look no further than the Boston metropolitan area and Silicon Valley for evidence. Both have led the nation in total VC funding over the last decade, and both have seen median sale prices skyrocket alongside median household income.
According to Pitchbook’s most recent Venture Monitor, South Florida saw the largest YOY increase in VC funding out of all major metropolitan areas in their study. Miami-based startups attracted $4B in capital in 2021, which marked a 325.1% YOY growth compared to 2020.
Miami has been dubbed by many as the crypto capital of the world. As crypto adoption grows, it will be interesting to see how it contributes to this trend of Miami becoming increasingly white-collar and tech-focused.
4. Wage Growth
As a result of all this opportunity flowing to the Miami metro region, median household income growth has been accelerating in South Florida in recent years. According to the most recent data from the US Census and the Department of Labor, metro Miami’s median household income increased by +24.17% from 2015 to 2020 after remaining flat from 2010 to 2015.
|Miami-Fort Lauderdale-Pompano Beach, FL
|1 Year Median Household Income Change
|5 Year Median Household Income Change
|10 year Median Household Income Change
Median household income by metro has yet to be released for 2021. Based on median home prices, population growth, and capital funding, all indicators point to another year of larger-than-average wage growth for South Florida.
A city’s culture is difficult to define and even harder to quantify. Still, when you ask people about an area’s culture, many can easily opine whether it’s good, bad, vibrant, or boring. If you ask anyone about Miami’s culture, most would define it as good, and very few would define it as boring (unless you don’t like beautiful sandy beaches with palm trees and great weather).
WalletHub had a crack at quantifying an area’s cultural offerings by ranking 180 US cities based on 65 metrics that fall into categories of entertainment, nightlife, and cost. South Florida fared very well by their methodology. Miami, FL ranks #4 on their list, while another South Florida city, Fort Lauderdale, ranks #15.
This may not come as a surprise to anyone who’s been to South Florida. It truly has something to offer everyone. Whether you like the club scene of Brickell and South Beach, the wall art and hipster vibe of Winwood, the spring break atmosphere of Fort Lauderdale, or the more laid back retiree/college crowd of Atlantic Ave. in Delray Beach, there’s a neighborhood for you.
Another cultural factor that attracts many from the northeast is diversity. Compared to other parts of the state, metro Miami is one of the most diverse. For those moving from heavily diverse cities in the northeast, South Florida looks more like what they’re used to seeing from a cultural standpoint. All of this combines to make South Florida incredibly attractive to those moving into the state from the north.
Source: Realty Biz News