Florida Housing Isn't Crashing. It's Worse Than That

The Florida real estate market is in trouble and it's breaking and no one's really talking about what is happening on the ground and why it is happening. In this video, I'll be explaining why Florida is very unique and that it's going to have some huge issues down the line over the next 5 to 10 years because of what we are seeing right now and how the entire state is actually set up economically. So, let's dig into what's happening. And if you're an investor, you're a buyer, you're a seller, or you're real estate agent, this is completely relevant to you and your business.

And this video is going to help you explain what you can do with your investments to make sure that you have a better experience here and can make the best decision for you and your family. Now, the real issue about Florida is not simply just because it's more expensive than other states. It really, this is the main issue, it has a thinner middle class. It costs about $116,000 median income to buy a house in Florida right now, but in 2024, half of the households in Florida made over 77k and the other half made less than 77k.

So, half of people really from the income standpoint as a household are not even able to purchase a house. Look at how this compares to the rest of the United States. There's more people that make less than 50,000. There's more people that make less than 100,000.

And this is a huge problem across the board and this is really shows up in the data. You can see the stratification by the number of people in each household and how much income that they do make. So, really they're looking, you know, not even a seven or more person household with a median income is able to afford you know, buying a median priced house in today's market. The income in Florida is generally, interesting fact, $10,000 less than the middle class of the United States.

So, even though we do have a middle class, they get paid less than other people in other states, which I think is a really important factor to look at. Meanwhile, it's also more expensive here and that really pushes people to the sidelines. And this is really true when you look at it from a top to bottom ratio. Florida is one of the most unequal states in the United States.

The top 1% earns 40 times the bottom 99% and the basically the middle class is much thinner in reality. So, this is comes from the Florida Policy Institute. You can see that New York is number one, Florida's number two, and Connecticut is number three. And this is Florida ranks 49th for the worst income inequality in the United States, which is a really huge issue when you're thinking about do I have a middle class that's actually going to be able to purchase homes or is it solely reliant upon people relocating to Florida to be able to purchase a home?

So, that's why I bring up this very important point about the middle class here because what we always keep saying is the locals are priced out. Well, this will actually show that that data is absolutely true. Now, this is the issue specifically, okay? The incomes that folks make in Florida just do not keep up with the housing costs.

You can see obviously in 2020 the 2022 time frames made it much worse and now we're simply mean reverting, but you can see here for single family homes, it's 6.4x. That's what it was in 2022, your income to be able to afford a house from the home price to income ratio. Now, it's down to 6x. For condos, it's 4.4, of course.

Then you have the monthly fees on top of that, so that doesn't help very much, but obviously this huge boom that we had from 2020 to 2022 is a huge problem and wages simply have fallen behind in the state of Florida as prices because of speculation and other factors that we're going to go into drove prices to a record high in the shortest period of time and wages did not keep up during that time period. Now, the middle class, this is Florida's household distribution by income bracket and age group. You can see that there's a lot of folks who make under $50,000. It's interesting fact, middle class share of income for Florida is 44.8%.

This is the third lowest in the United States. And the middle class continues to get smaller as it becomes closer to simply a two-class system, which we talk about the K-shaped economy. The wealthier keep getting wealthier and the poor keep getting poorer. The working class and the super wealthy are the two with a small smaller middle class.

And having a smaller middle class is again bad for housing cuz you have to ask yourself, who is the next buyer of these properties if they're not investors? Who are the people? And so, I'd love to hear from you. Drop below in Florida as you see this issue with the middle class getting smaller and smaller as time goes on, who will be the next buyer of all the real estate that transacts here because we have one of the real estate biggest real estate markets in the country.

Now, here's a visual view from the median household income in 2024 according to the Census Bureau population survey. You can see here in the white, this is what the median household income is. It's less than 75k and there you go, Florida's in white. Obviously, it does much worse than other states.

So, again, they're making less and it costs more and that's the huge issue for the middle class here in Florida. Now, this is a great chart. It just says the Florida homeowner premiums. So, there's other issues, right?

It's not just about wages, it's also about costs. You can see that costs for Florida just for simple things like homeowner's insurance continues to move up and it's rising faster than the national average. The assets here continue to move up more than the rest of the country as well, inflated by this massive migration that we had basically 10 years of demand pull forward and happened within three years. And we have investors that are doing massive speculation on the market here between institutional investors and 90% of them are actually mom and pops going out there and gobbling up multiple properties pushing higher prices and higher rents and that's really held back Florida from moving forward in a really positive way that's sustainable because again, Florida goes through these boom bust periods, which is not like the rest of the country.

The reason why is because their middle class is smaller and there's more speculation. Taxes are also shifted in ways that hit the middle income earners while the wealthy continue to get the majority or the lion's share of the tax benefits and there's more movements even today in that regards that will mostly benefit the the wealthier folks. So again, there's a tax policy out there by DeSantis to get rid of property taxes. What I thought would be a better idea is to increase the homestead exemption or double it, double the exemption versus just get rid of the taxes and that primarily helps people who have the most expensive homes from a dollar to dollar.

And so, I think there's other ways to do it, but that's not what they're proposing. They're proposing let's give it a top-down approach versus a bottom-up and that's going to cause obviously Florida to have more issues down the line. Now, the job market is also a problem, okay? Because Florida economy is heavily weighted towards hospitality.

Obviously, about 22% of the population here are boomers or older and so, there's a lot of hospitality, a lot of people who come and visit health care support roles. Obviously, that's a huge one, hospitality people visiting for vacation, things like Disney, going along the coast. Real estate is a massive part of the GDP. It's 19 to 24% of GDP and we have a ton of construction.

And there's less exposure here. There's not as many good high-paying jobs as other areas. There's not the high-paying tech that you see. Obviously, Miami's making some some waves there in Tampa as well.

It's not as big of a finance hub and we don't have advanced manufacturing. I think some people stay away from Florida in some regards because of the hurricane issues that we have here. And overall, you see that this waiting basically makes it not as powerful for the middle class when you don't have as many relocations of all these industries that are coming here. And this is again what we call the creation of the K-shaped economy.

We are seeing all these benefits in Florida going to the top. There's not as much middle class jobs and there's a lot of service jobs and that's causing this massive inflation at the top for prices without the wage inflation to follow. Secondly, there's a shortage of affordable housing and this is a huge problem. There's an extreme cost burden according to this 2024 Florida Housing Profile and I think this is really important to to look at and basically this shows that there's a shortage of rental homes that are affordable for the middle and extremely low-income renters.

I think this is a good thing to acknowledge here. We do not have really affordable We were actually one of the worst from an affordability standpoint from the median wages versus rents and I'll show you this next chart that came out. This actually just came out on April 7th. The new study ranks Florida dead last for renters in the US with housing costs consuming 37% of the income.

This is just what it was in the run-up to 2008 at the peak prices. So, this affordability crisis is real and it's extremely real in Florida specifically. This is the Consumer Affairs study Rents of Tenant Laws in each 50 states and Florida was the bottom taking toll on residents and the surprise was those for who rent in the state. And so, it's a big problem.

I think that we will continue to have this problem especially if builders don't build in affordable price points and they don't have the incentive to, but things are changing. So, listen to the end of this video because this is not going to last forever and the market is changing really quickly and it's going to be a huge benefit for renters down the line and a really big problem for investors and sellers. The middle class buyer in Florida, frankly, is more rate sensitive. So, let's get to the to the end of this.

More payments are constrained because the middle class has a lot of debt and they're more likely to pause quickly if there's stress in the market because they're just not as stable financially. And this is why Florida is facing right now the perfect storm. So, this is the biggest issue. This chart right here behind me, it's the net migration shift.

This is the terrifying chart that a lot of people are pointing to. You can see we had this massive migration from 2020 to 2022, 2023 and now we're down about 93% for the state of Florida in net domestic migration. This is people moving from other states. So, we no longer have these people who are moving here from high cost, high tax areas, and they're gobbling up houses paying cash.

This is really coming to a halt. This actually happened after 2010. We also had the same phenomenon pass through, and this is what's going to severely disrupt the real estate market moving forward. If we don't have the net domestic migration, because it no longer is affordable, and there's other issues that Florida is facing where people don't want to be here.

And we basically had all this pull forward demand in these few years that resulted in now we're having the lowest level of number of closed and pending sales coming forward. Another thing to look at is that Tampa, specifically, and then we're going to see this in happen in more cities around Florida, is actually having people relocate back to where they came from. And this is just because people are going back to work, people are experiencing job loss, and this is part of what we see with the boom bust period. You can see obviously the same thing happened from 2000 to 2005 where we had this massive migration to Florida and prices skyrocketed, and then we had 2008 hit, and it went all the way back down, people stopped coming, and now we spiked all the way back up, and now people are actually leaving.

And so, it's very similar chart, if you were to look at a price chart, it goes up and down just like this. We go through these boom bust again, because it's a lot of speculation, it's a lot of people coming in from the top, and the middle is much thinner than these other states. And now what we're seeing is a massive amount of inventory growth. This is the supply.

This data is about 1 year's old, but it shows a really good example. Tampa, Orlando, Jacksonville, Miami are the top inventory growing housing markets, especially when we look at it compared to 2019 before the 2020-2022 time period. We are seeing massive growth in the amount of inventory, and this is causing, thankfully, with finally the prices to come down, which is helping the middle class both for renters and for for buyers. And so, sellers are losing their power.

We're already seeing this accelerate. This is a chart that we see the 1-year change in metro level home prices between February 2025 and 2026. You can see Florida is just a flurry of red. Also, we saw that a lot of spot speculation in the Sunbelt areas, and we're seeing a lot of red there.

Obviously, what we're seeing up north is completely different because they don't have the supply build-up, they didn't have the massive construction, they didn't have the amount of speculation that we had, and they didn't have the migration demand that we had. And so, they did not have that massive run-up that we saw down here in Florida. And we saw that massive run-up happen, and then domestic migration slowed, and then we saw international immigration as well drop about 70% from the peak. So, those two factors, right?

If So, if we're not importing people to the state of Florida, the middle class can't buy, the lower class obviously can't buy. Their 37% of their income is already going to their rent payments. They have nothing to save to be able to buy something. So, this is what we're This is the problem with Florida.

Again, we need the Who is the next wave of buyers who are going to actually purchase at today's price and today's interest rate? It's a very thin number of people who can actually do that. And of course, these folks, when they try to go sell their house, they can't sell it. They put their house back on the market as a rental, and then the rentals supply becomes a glut.

And so, now we're seeing rents come down as well as prices come down, and rents are coming down all across Florida. So, it's time, if you're a tenant, to start negotiating. You could see like some areas are already experiencing 20% decline. So, we're already in a correction uh from the rental perspective, but there's areas, you know, again, Jacksonville only says 9.9%.

That's where I am. It's down 20-25% in some areas, and the rentals are sitting for 2 to 3 months. So, this is really important to think about who's going to be the next renter as well that's going to fill that unit if we don't have the international immigration and that domestic migration is down. And folks are looking for cheaper and cheaper places to live, and so they're starting to move around and start negotiating, which is good for them.

So, I'd love to hear from you what you think. Do you think Florida's housing market will hold up this year? Will it go negative? We're already seeing it negative really big on the ground here.

My financial models show that we should be seeing a 31 to 42% decline in prices here in Florida over the next 5 to 10 years, as long as there's no crazy thing that happens in the marketplace. That's just the disconnect between the wages and prices that we see right now. And I'd love to hear from you. Are you in Florida?

Yes, no, or where are you? And we'd love to hear what's happening in your market. As always, if you're looking for a top real estate agent, reach out to me. I'm happy to get you connected with one of the top agents in the marketplace.

80% of real estate agents are really bad. They don't do enough transactions to help you. If you need, again, a guide on interviewing them, I'm more than happy to help you do that. And if you're experiencing a short sale, you need to You have a foreclosure coming up here in the Florida or Georgia, reach out.

We have a lot of resources that can help folks, because we're getting those calls every single day now about people who bought from 2022 to 2025, and they're saying, "Hey, I'm underwater. I need to sell. Can you help don't have the cash to get out. And so, we're looking to help those people as much as humanly possible.

Thanks for watching today. I'll do a live on Friday at noon, and I'll see you next week.