STOP! Over 1 MILLION People INVADED Florida

Florida may experience a mass exodus. Many still love the Sunshine State and won't move no matter how many hurricanes disrupt them. However, overall Floridians are concerned about the cost of living that's increased since domestic migration flooded Florida from 2020 through 2023. According to census.gov, in a three-year period alone, Florida gained more than an estimated 1,072,000 new residents. Let's dive into the data and we'll also hear from a Florida real estate broker for his boots on the ground information. If you're new to the channel, I'm Todd Sachs, a real estate broker myself, and my job is to keep you informed about what is going on in the housing market. So if you haven't already subscribed, please do so now and hit that alert bell to stay informed. Now many have already exited the state of Florida and many more are either considering a move or have their homes on the market right now. So how can we tell? Well, home inventory is skyrocketing and home prices are dropping like a rock and there's not much buyer demand despite the price reductions of both new and existing homes available for sale. And many of these home builders are offering rate buy downs where in some cases they're offering a 30-year fixed rate mortgage around 5% if you use their mortgage lender. And in this Wall Street Journal article posted in October, it pretty much says it all. It's titled The Great Florida Migration Is Coming Undone. It shares the story of someone named Anthony, one of the many who migrated to Florida who have either already left the state or want to leave for one reason or another. Tampa Bay, Florida. Anthony Holmes was part of the Great Florida Migration. In 2021, he moved from Virginia to a gated suburban community in Tampa. Now that he has had to leave, Holmes is another victim of the glutted housing market where buyers are increasingly hard to find. He paid $550,000 for his five-bedroom home and spent another $50,000 on solar panels and interior improvements. When he had to move back to Virginia for work, Holmes expected to sell the house quickly, but since listing it in February, he has had no luck. He dropped the price five times to $583,900 and would be happy to simply break even. I can't unload this thing, Holmes said. In eight months, I've had zero offers. No one even showed up for the open houses. Nobody. Well, since this October article, it appears that the Florida housing market has gotten worse. So, on this Fred chart, from October through November, we had a 7,226 home increase in inventory that one month alone. And this is probably not including all of the new home inventory that's available because builders rarely report that information to realtor.com where the Fred chart is getting their information from. In fact, out of the top seven cities leading the nation in year-over-year home price declines, Florida cities take the number one, two, three, and five spots. And this is according to data analyst Lance Lambert. I posted a video about this last week. Now, let's go back to that Fred active inventory chart. So, in this chart, this is put out by the Fed. This is a housing inventory active listings count in Florida. And I made a maximum view here. It only goes back to about 2016. But as you can see, and this is the active home inventory for sale inventory in Florida. As you can see here today, or as of last month, November 24, we are up to pre-pandemic and really dates back way before the pandemic. We're seeing higher inventory. A couple of things that I want you to pay attention to is that it kind of peaked here in, and we're almost there now, in 2019. And a lot of people, they don't realize that before the pandemic, we were actually headed into a recession. But watch what happened when we hit to the pandemic in 2020. What happened was as we saw migration headed to Florida, you can really see that that inventory really started taking a dip because people were buying as much as they could, buying houses to live in, but not just that, vacation properties, leaving their states. We also saw investors buying up property like mad for this speculation of short-term and long-term rentals. And we really saw the drop or the lowest point of inventory in Florida right around the beginning of the season, the house selling season, right before the spring market in 2022. And this is because in March of 2022, the Fed started hiking rates faster than they ever have in history. And as you can see, as we're going along, inventory has been rising ever since. So we started seeing that buyer slowdown in March of 22 when the Fed started to raise their interest rates. This ultimately impacted mortgage rates. And since we had that massive demand on housing during the pandemic boom with historically low mortgage rates, some down as low as 2.74% for a 30-year fixed rate mortgage, this really created the housing shortage, which drove up home prices. This obviously was great for sellers at that time. But if you've bought a house before, you know that a bulk of your mortgage payment is the mortgage interest that's paid to the bank. So it's a very rate-sensitive payment. But also we have to consider that that's not the only expense that's gone up. We've seen a massive rise in the cost of homeowners insurance in Florida, and also property taxes have skyrocketed. And that doesn't even consider the rising cost of home maintenance and repairs. And let's not forget the destructive hurricanes that have destroyed homes and lives in 2024, where many of these homeowners were uninsured. And to put things into perspective of what happened to the Florida housing market, let's look at this net domestic migration chart by county from 2021 to 2022. And this is brought to us by census.gov, and I'll drop the link to this chart below in the show notes. So you can see what happened to the Florida housing market in just one year alone. And what we're looking at here is all of the blue on this map is the amount of domestic migration that moved into an area. And the red is showing us where people left the state, moved out of the area for the other areas that are marked in blue. And we can see this exodus in states like my state here in Maryland, as well as New York, including really a lot in New York City. And then we can really see a lot of people that moved out of the state of California. So who's having the most difficulty trying to sell their Florida home right now? Is it homeowners with existing homes? Is it the investors who gobbled up homes by the thousands for long-term and short-term rentals? Or is it the new home builders that are trying to sell their new home communities with the costly homeowner association fees attached? To learn this information, we'll turn to Florida real estate broker, Phil Simonetta. Phil, thanks so much for joining me today. It's great to be back, Todd. For context, tell everybody, I mean, you're a real estate broker in Florida, but tell everyone what areas you cover. Yeah, well, my office is in Jacksonville, my headquarters. Now I have agents throughout the state. We're in Miami, Fort Lauderdale, Tampa. I have some down in Naples and also smaller areas. So we cover the entire state of Florida. I'm also licensed as a broker in North Carolina and Tennessee. So what's your current assessment of the Florida housing market right now? I'll tell you something. The housing market, it's frozen up. I mean, I'm seeing it throughout the cities. It's not just Jacksonville. I mean, Jacksonville is probably one of the worst. There's certain areas that haven't really cooled off and there's other areas that have completely cooled off. Just like in any market, you're always going to have areas that do well and you're going to have other areas that don't. So a lot of times when people are saying, hey, prices aren't going down in my neighborhood or prices aren't going down in this building, you see a lot of comments like that when we do our videos. But what people have to understand is there's a simple fact. If everybody understood where the market was going, there would never, ever be a crash, right? They're not understanding that the entire inventory is doubling. I mean, for the last three, four months, we've been having 10 to 15,000 units hitting the market every seven days between all the MLSs. We've been having 2,000, 3,000 closings in those same days. The public doesn't see those numbers. They see the numbers from a month and a half ago. That's the NAR numbers and the statistics to go out. It's always a month and a half behind. However, us as brokers, we can see that last seven days and these last seven days have been quadrupling over and over. And not only that, there's a lot of deals falling apart. The last seven days, I mean, there's thousands of deals, a couple thousand deals fell apart. That means they were in contract and they fell apart due to financing or due to bad inspections or some kind of contingencies and they're going back on the market. So that's what's really happening in general. Are there always going to be pockets and buildings that don't come down? Yeah, there's always going to be people that want to live there and more that want to live there than are available. That's supply and demand. Would you say the bulk of the ones that aren't coming down, are they more of your luxury properties or more waterfront? No, a lot of luxury properties, I would say a million, I'd say 750 to a million and a half are frozen up. Now, the more expensive ones are holding. I mean, you'll see transactions, 10 million, 15 million, 20 million, very, very specific properties. They're holding because people want to be there. But I'd say the mid-level luxury, I mean, nothing's happening. Listings are there. Look how many days are on the market. You see people dropping prices. It's just the statistics. I mean, numbers don't lie. People do. And you have to look at the facts, not the emotion of it. So when you see the comments, like on our last video that we posted that the Florida housing market was crashing and we showed very good evidence of, so it wasn't very anecdotal. It was actually pretty broad spread. I mean, we were looking at houses on the market for seven, eight, nine months, five, six, eight price reductions. What do you say to those people that are commenting that you're wrong in your assessment of Florida? Do you think that they're just popping off? Are they maybe real estate agents that are in denial? Why do you think that so many people comment and say that you're wrong? The Florida housing market is not crashing. Yeah. Well, I mean, real estate agents, 400,000 quit in the last few months and there's a lot more going, I believe. So there's that first of all. But second of all, a lot, like I said before, if everybody got what was going on, there would never be a crash. So what you have to understand, I have listings right now all over Florida. I have in Jacksonville, New Smyrna Beach, Fort Lauderdale, Tampa. Buyers have completely slowed down. I'm getting lowball offers, wholesalers, $50,000, $100,000 in the market. Buyers have completely slowed down. The average, and it's affordability. It all comes down to affordability for them. They can't afford the profits. What are your sellers saying? I mean, are they concerned? Yeah, they are. The sellers are pretty concerned. I mean, they're coming to reality. And I've had this conversation with them from the first time I spoke to them. Listen, market trajectory is coming down. Here's how many, and the conversation I have is here's how many houses hit the market in the last seven days. Here's how many price decreases there were. There's more price decreases than houses hit in the market. And I explained to them, here's where you are. Here's what you bought it for. Here's where you are. Here's where the market's going. Do you want to get ahead of it? That's why we're 10 or 15,000, maybe 5,000 under. I have one client who needs to sell at a certain price because they don't really have equity. And the price they're asking is really what it's worth average. But I don't think we're going to find a buyer at that price right now because the market trajectory and what the builders are doing. So you have builders in this development where this house is, the builders are still building the same house. This house you bought for 500 and some thousand dollars. The builders have just reduced the price of the houses, reduced the price 90,000. They're giving 10,000 seller credit, paying 5% commission and buying the rate down to 5.5%. So how is she going to sell her house at a number higher than what the brand new one down the street's going for, same exact cost? Why do you think the builders are, are they panicking? The builders simply, their carrying cost has doubled, maybe tripled in some cases. They have to pay interest only on these loans. This inventory is building up. And look at, just take Lennar. I mean, their sales are down 15% from one- I think you sent me D.R. Horton too, right? Yeah, D.R. Horton too. And D.R. Horton made an announcement a couple of weeks ago about where they see the trajectory of the market and their stock price dropped 11%. So not only are the sellers scared and unsure of what's going on, the bottom line is going from 1.5 billion to 1.2 billion doesn't seem like a big thing, right? But what the problem is, it's not only dropping from 1.5 to 1.2, their carrying cost on all the money they're borrowing has doubled. So not only are they losing money there, they're losing big time on the carrying cost of the interest on the loans. Phil, with the listings that you're taking on and educating the sellers that the market is in a downhill trajectory, are you meeting with people that you're not getting the listings? I mean, are sellers not, are you finding where some sellers just aren't believing you or not hiring you because you're trying to tell them what's really going on? The only clients that I'm not listing are unwilling to price the property accurately. So there are people that you are meeting with that are not hiring you because of what you're telling them. Yeah. I won't overprice a listing. It's just not, it doesn't make, it's not doing them justice. And if somebody else is going to do it, which that's probably what happens, you know, they talk to a couple of agents and somebody tells them what they want to hear just so they can get the listing. As a broker, are you concerned that the lack of sales will hurt Florida real estate agents and brokers like yourself? A hundred percent. It's going to hurt the people who cannot pivot. It's going to hurt. When it comes to listing property, most of these agents, they're going to put it on the market. They put it in the MLS and then they pray somebody comes and buys it. You got to have an aggressive approach. You have to market these internationally. You have to market these outside of your area, especially here in Florida. There's no showings going on anywhere. Again, it's Christmas week. You know, it slowed down after the hurricane, after the hurricane came through the two hurricanes, things really slowed up and I can give you that. That hurt us a lot. And then you have the Thanksgiving. Now you have the Christmas time. So that's starting to slow up. I'm thinking after you had inventories, rising inventories, quadrupling, not rising. I mean, inventory is up by thousands a week, tens of thousands. So why are these people listing their homes? If it's a bad time of year, historically, why are they listing their homes right now? The reason people are listing is because they know the market's coming down. And if they don't get out now and get the equity, it's only going to get worse. And you know, look, the next two, three, four years, I don't see it getting better. The only thing that's happening right now is people coming into Florida and buying. You don't have people in Florida buying other houses in Florida. It's people coming to Florida. They're still selling and moving to Florida, but that's slowing down big time because of the taxes, because of the insurance. People are having a hard time. I mean, you're talking a thousand to $1,200 a month for insurance on average homes that are outside of floodplains. So Phil, what has to happen to home prices to make it make sense for homebuyers? Back to the affordability. Homebuyers can only afford a certain payment. And this is just like the car business or anything else. They can afford a certain payment. If the house price is here and the interest rate is below it, it gets you to that payment. Well, now the interest rates are up here. So what has to happen? It's logic. Prices have to come down to where you can get them to that affordable payment. Their affordable payment, you know, right now, if you look at the affordability, you got to make $160,000 a year to afford an average house, a household income, to afford an average house at today's rates, today's prices. Not happening in Florida. Not happening. I mean, the average income in Florida is about a hundred thousand, you know, about a hundred thousand dollars, you know, and what's that mean? That's household. Household income, average. Now I'm not saying, you know, I mean, listen, go to Miami. It's different. Go to Fort Lauderdale. It's a lot different. I'm talking average. I mean, there's places in Florida, $35,000 a year, $50,000 a year, small towns. Are you seeing where, you had mentioned these other costs, Phil. You said insurance, $1,200 a month to insure the house. Are you seeing where buyers are not able to get insurance? I mean, do you think a lot of the cancellations that you've seen with contracts are, you know, they fell apart directly because not being able to get insurance or not being able to afford the insurance payment? I think that's what's happening. It's blowing the debt ratios out. It's not that they don't want to buy them. It's they can't. The lender's not going to lend it at the debt ratio. And what's happening is there, there are insurance companies pulling out. You always have citizens last resort, but they're, they're cutting back now. They're trying to bring other insurance companies in, you know, it comes to a point where is it worth spending the money? I mean, a thousand dollars a month, even if it's six, $800 a month, it's a lot of money, man. You know, you know, people have kids, they put kids in daycare, they got school. Not counting taxes. Not yet. Yeah. I mean, you're talking the taxes and the insurance is as much as the mortgage. What is your governor doing? Do you see anything that your governor is doing to fix this growing housing crisis? I don't, I don't know if there's something politicians can do. You know, this, this thing's out of control. And what caused it was, was the fed and politicians having a rate at 2%, 3% for how many years that allowed assets, cars, houses, everything, not, not just houses. Everything has gone up 160, 200%. You know, people, it doesn't make sense. Yeah. I think a big thing is the amount of migration that you guys have received in the last three, you know, in three years, 2020 to 2023 in an area where there just isn't jobs. I mean, that's the bottom line. I mean, there are, there are employers there, but on a major scale, it's mostly hospitality and retirees. And it just, it, you know, people thought that they would go there and work remotely and then they're being called back into the office. What can home buyers do at this point? If you're advising a home buyer, what should they do to get their best deal? Well, the first thing anybody should do when they're hiring an agent to represent them is investigate the agent. How many deals have they closed? How much experience do they have? You know, where they are in the industry. You know, again, you know, the numbers just came out. 74% of agents in 2024 didn't close a deal. You know, what, 3 million agents, that's 220,000 agents that didn't close a deal. You know, a lot of these agents are meeting a paycheck, right? Have other jobs. Look who you're hiring. Look at their background, Google them. You know, do they own a brokerage? Do they not own a brokerage? Are they an agent? Do they work for a broker? What's the responsibility of the broker? Does the broker work with them and train them? It all comes down to experience. Now, when it comes to pricing, simple, look at what's on the market, look at what's pending and look at what closed in the last six months. And I'm telling my buyers offer $10,000 to $15,000 less than what closed in the last six months and start there. That's the bottom line. I mean, there's really, you have to start lower. You may have them come down. The other thing I'm doing is I'm looking at properties that's been on the market for at least 14 to 21 days, because that's right when the seller gets on the market. Now I'm putting on my buyer agent shoes. So when the seller is on the market 14 days, three weeks, they start thinking, hey, what's wrong with my house? Am I too high? Are things aren't happening? Do I need to lower the price? Now you can get in there, offer them $10,000, $15,000 less, try to get some seller assist. That's the kind of thing you need your agent to understand, how to go about that. So you're telling them to offer less on the houses that are on the market and the sellers, I think your advice to the sellers is they better take it while they can, is what I'm hearing you say. Yeah. My advice to the seller is it's not going to get any better in the short term, maybe two, three years, maybe longer. It's not going to get any better. It's only going to get worse from where the trajectory and every aspect of what we're looking at is coming at us. And it's cycles of the market. Well, appreciate your time, Phil. And we'll see you next time. All of your information is in the show notes for anybody that's looking to move to Florida. As Phil said, he covers the whole state. So reach out to him. He'd be glad to talk to you. We'll talk soon, my friend. All right. Have a good day. So is Florida a unicorn or do you believe we'll see more housing market problems in other parts of the country? I'd love to know what you're seeing in your town. So please drop your comments below. And if you liked the video, you can let me know that you did by hitting that thumbs up. And one of the biggest compliments you can do for me here at Sachs Realty is to share this video and our channel with your family and friends. Let's continue to build the most amazing online community together. I appreciate you and I'll see you next time. Sachs Realty, Maryland broker number 607720. Office number 443-318-4514. Equal housing opportunity.