Florida is one of the most expensive states for housing, and Miami is the least affordable city in the country, according to a report. High demand, short supply, increased migration trends since the pandemic and exploding mortgage rates, make for a pricey combination.
According to Zillow, a typical Florida home is valued at $406,426, a whopping 22.4% annual increase. To put this in context, the national average home value is $357,544, a 12.3% annual increase.
The state has also been a magnet for people who wanted to relocate since the start of the pandemic. And Florida’s population increased by 1.9% to 22,244,823 between 2021 and 2022, making it the fastest-growing state and surpassing Idaho, the previous year’s fastest-growing state, new data from the Census Bureau shows.
The reasons that make the state attractive are legion, year-round agreeable weather, endless beaches, and let’s not forget: no state income tax. In comparison, New York, for example, has a 10.9% state income tax, California has a 13.3% tax, Oregon has a 9.9% tax and Georgia has a 5.75% tax, according to the Tax Foundation.
In turn, this translates to Miami being the least affordable housing market in the country, according to RealtyHop. This month, the median asking price increased 0.50% to $598,000 from $595,000. RealtyHop added that a family making an average household income of $44,581 must now direct a substantial 85.67% of their paycheck toward housing costs.
The affordability crisis in the state means that prices for single-family homes and condos in Miami-Dade County and Broward County increased between 9% and 14% in November compared to the same month in 2021, according to the Miami Herald, citing data from the Miami Association of Realtors.
Ken Johnson, Florida Atlantic University finance professor, told the Miami Herald that the low inventory continues to be an issue in Miami’s housing market. One solution, he added, would be to turn empty homes into longer-term rental properties rather than Airbnbs.
“We have a huge number of Airbnbs that have taken long-term rentals off the market and made them available for short-term rentals,” he told the Miami Herald. “A lot of those are switching back to long-term rentals because rents are so high.”
There is some good news for 2023 however, for Americans who went to head south. Inventory has started to pick up in the last part of the year, which could translate into lower prices.
“Rising inventory means more options and less bidding wars for Broward County homebuyers in our high-demand, low-supply market,” Broward-MIAMI President David Dweck said in a press release. “Like all South Florida, Broward County has seen a surge of buyers from high-tax, high-density states. Sales are down year-over-year in comparison to a record-breaking 2021 but remain close to pre-pandemic totals despite high mortgage rates.”
More From GOBankingRates
- I'm a Self-Made Millionaire: 5 Stocks You Shouldn't Sell
- Costco: 9 Best Clothing Deals in February 2024
- What Makes a Good Bank in 2024, According to a Banking Expert
- I'm a Personal Finance Writer: These Are the Worst Money Mistakes I Made in 2023