U.S. Luxury Home Prices Spike 9%, But Inventory Grows

 Redfin reports that thanks to all-cash buyers, luxury home prices grew nationally more than non-luxury homes in the second quarter of 2024.

SEATTLE — The typical U.S. luxury home sold for a record $1,180,000 in the second quarter, up 8.8% from a year earlier – the biggest increase in nearly two years. Non-luxury home prices grew at less than half that pace, rising 3.8% to a record high median of $342,500, according to a new report from the real estate brokerage Redfin.

Redfin defines luxury homes as those estimated to be in the top 5% of their respective metro area based on market value, and non-luxury homes as those estimated to be in the 35th-65th percentile based on market value.

“The luxury market has withstood the havoc wreaked by high mortgage rates this year, thanks to an abundance of all-cash buyers,” said Redfin Senior Economist Sheharyar Bokhari. “Now that sales are stabilizing and more homes are being listed for sale, it’s unlikely that luxury prices will continue to grow at quite as high a rate.”

High-end buyers were less likely to be impacted by the rate lock-in effect and uncertainty around the direction of mortgage rates, which sat above 7% for much of the quarter. They were also more likely to have benefited from a strong stock market and high levels of home equity. This spring, 43.7% of luxury homes sold were purchased with all cash, up from 43.2% a year earlier. (Note the all-cash data covers the three months ending in May, the most recent month for which all-cash data is available).

Luxury home sales stay positive as non-luxury sales fall

The number of luxury homes sold in the second quarter was virtually unchanged from a year earlier, ticking up by 0.2%, marking the third consecutive quarter of sales growth. Non-luxury home sales fell 3.4% to the lowest second-quarter number in a decade.

“There is still strong demand for well-priced, high-end properties, especially those which are presented beautifully and move-in ready,” said Crystal Zschirnt, a Redfin Premier agent in Fort Worth, TX, where luxury home sales were up 9.7% year on year and typically sold four days faster than non-luxury homes. “We had a client recently list a property for $2.4 million that we ended up selling for $2.6 million. We are still seeing multiple offers in situations where a property is priced accurately, visually appealing and doesn’t need any work.”

Even though the overall market is seeing far less activity than it did pre-pandemic—in large part due to an ongoing supply shortage—the luxury market has made up more ground since. Compared to the second quarter of 2019, luxury sales were down 12.8%, while non-luxury sales were down 20.1%.

Luxury home inventory grows to highest level in 3 years

Luxury inventory rose 9.7% year over year, the fourth consecutive quarter of growth following a major drop off during and after the pandemic. Non-luxury inventory rose 3.9%. It’s worth noting inventory in both categories is still well below pre-pandemic levels.

The number of new listings of luxury homes increased 11%, far outpacing the 2.6% increase in new listings of non-luxury homes.

Luxury and non-luxury homes sitting longer on market

With inventory increasing, luxury homes stayed on the market a median 40 days—two days longer than a year earlier. Non-luxury homes also took longer to sell—a median 31 days—up from 28 days last year.

“We are seeing luxury homes selling within 30-45 days, but that’s a lot longer than in 2022 when they were flying off the shelf,” said Juan Castro, a Redfin Premier agent in Orlando, FL, where inventory ballooned 22.7% in the second quarter, year over year. “International cash buyers are still driving activity, but we have seen a slowdown in local buyers, as it’s really hard to upsize to a luxury home with a 7% mortgage rate.”

Metro-level luxury highlights: Q2 2024

Redfin’s metro-level luxury data includes the 50 most populous U.S. metros. Some metros are removed from time to time, to ensure data accuracy. All changes noted below are year-over-year changes.

• Prices: The median sale price of luxury homes rose most in Providence, RI (16.5% increase to $1,395,000), San Jose, CA (16.4% increase to $4,830,000) and Nassau County, NY (14.3% increase to $2,572,500). It fell in just two metros, in New York (-3.2% to $3,200,000) and Austin, TX (-1.5% to $1,650,000).
• Sales: Luxury home sales increased most in Nashville, TN, (20.4%), Tampa, FL (14.3%) and Seattle (13.9%). They decreased most in Newark, NJ (-20.1%), Baltimore, MD (-15.5%) and Indianapolis, IN (-12.4%).
• Active listings: The total number of luxury homes for sale increased most in Tampa, FL (29.6%), Jacksonville, FL (28.9%) and San Antonio, TX (26.6%). Total inventory fell the most in Newark, NJ (-16%), Chicago (-9.8%) and Atlanta (-6.2%).
• New listings: New listings of luxury homes increased most in Providence, RI (31.5%), Miami (28.1%)and Tampa, FL (27.6%). New listings fell in 11 metros, with the biggest declines in Newark, NJ (-18.3%), San Francisco (-15.4%) and Chicago (-8.9%).
• Speed of sales: Luxury homes sold fastest in Seattle with a median of six days, while Detroit, San Jose, CA and Indianapolis, IN all recorded a median of 10 days. They sold slowest in Miami (114 days), West Palm Beach, FL (108) and Nassau County, NY (81).

10 most expensive U.S. home sales: Q2 2024

• Glenwood Springs, CO (Aspen): $77M
• Glenwood Springs, CO (Aspen): $66.5M
• Los Angeles, CA: $62.8M
• Miami, FL (Miami Beach): $62.5M
• Glenwood Springs, CO (Aspen): $59M
• West Palm Beach, FL (Palm Beach): $51.3M
• West Palm Beach, FL (Highland Beach) $50M
• West Palm Beach, FL (Palm Beach): $49.6M
• Glenwood Springs, CO (Aspen): $48.8M
• Glenwood Springs, CO (Woody Creek): $46M

© 2024 Florida Realtors®

South and Central Florida had the highest rent price increases after the pandemic

Tampa and Miami saw the highest percentage increase in rents from June 2019 to June 2024.

SANTA CLARA, Calif. – Rents fell again in June, with especially large declines in the South, where there's been an influx of new rental units, according to a Realtor.com Rental Report. The median asking rent for 0-2 bedroom units fell -0.4% ($7) from last June to $1,743, marking the 11th straight month of declines and -0.6% ($11) below its August 2022 peak. Still, some markets have seen rents surge by as much as 40% compared to 2019's pre-pandemic levels, with Tampa, Fla., seeing the largest increase over the past five years.

The Top 10 markets experiencing the fastest price growth versus pre-pandemic rents include: Tampa-St. Petersburg-Clearwater, Fla. (+39.5%); Miami-Fort Lauderdale-Pompano Beach, Fla. (+39.2%); Indianapolis-Carmel-Anderson, Ind.(+37.5%); Pittsburgh (+37.4%); Sacramento-Roseville-Folsom, Calif. (+35.8%); Virginia Beach-Norfolk-Newport News, Va.-N.C. (+32.5%); New York-Newark-Jersey City, N.Y.-N.J.-Pa. (+31.3%); Cleveland-Elyria, Ohio (+30.6%); Raleigh-Cary, N.C. (29.8%); and Birmingham-Hoover, Ala. (+29.3%).

"Rents have been steadily falling for almost a year, though the pace of the decline has slowed," said Danielle Hale, chief economist at Realtor.com. "But rental costs have risen significantly since before the pandemic and inflation has further strained renters' budgets, underscoring the need for more supply to meet demand and to keep renters from contributing an increasing percentage of their incomes to housing costs."

Tampa saw the highest rent growth since before the pandemic

The median asking rent for 0-2 bedroom units across the top 50 metro areas in June was 21.2% ($305) higher than the same month in 2019, before the pandemic roiled the housing market. That's roughly in line with the trend in overall consumer prices (+22.6%) during the same period, but pales in comparison to the 52.6% increase in median price-per-square-foot of for-sale home listings in the five years ending June 2024.

Half of the 10 markets with the highest percentage increase in rents from June 2019 to June 2024 were in the South, led by Tampa, Fla. (39.5%) and Miami (39.2%). In Tampa, for example, the median asking rent in June was $1,752, or $496 higher than the pre-pandemic level. That is equivalent to about 8.6% of a typical Tampa household's monthly gross income. The biggest increase in the Midwest came in Indianapolis, up 37.5% to $1,353. Pittsburgh saw the largest percentage jump in the Northeast, with the median asking rent rising 37.4% to $1,484, and Sacramento, Calif. led the West, with the median rent climbing by 35.8% to $2,007.

Rents fell in the South, rose in the Midwest, and were mixed on the coasts

Regionally, rental trends were mixed in June. The biggest year-over-year declines were all in the South, led by Austin, Texas (-9.5%), San Antonio (-8.2%), and Nashville, Tenn. (-8.1%). Those areas have seen substantial increases in the supply of new rental units. In the Midwest, rents rose overall, with increases seen in Indianapolis (+4.4%), Milwaukee (+3.7%) and Minneapolis (+3.7%). Large metros in the West saw year-over-year rents decline, including Los Angeles (-1.9%) and San Francisco (-4.2%). Meantime, big coastal cities in the Northeast, such as New York (+0.6%) saw rental rates edge up, albeit more slowly than before.

Units of all sizes saw rents decline

Median asking rents fell across all size categories, with smaller units showing larger declines. The median rent for studios fell by -1.2% on a year-over-year basis, to $1,463. That's -2.0% lower than its October 2022 peak but 17.6% higher than five years ago. Median rent for one-bedroom units fell -1.1% to $1,618, for the 13th consecutive year-over-year decline. That's still 19.5% higher than it was five years ago. And the median rent for two-bedroom units fell by -0.3% to $1,939 for the 12th consecutive month of annual declines, though it was a smaller drop than seen in May. These larger units had the highest growth rate over the past five years, rising by 23%.

© 2024 Florida Realtors®

Fannie Mae: U.S. Home Price Growth to Moderate

 Many Sunbelt metros are currently seeing significant increases in for-sale inventories, in part due to new construction, a Fannie Mae economist said.

WASHINGTON – Home price growth in the second quarter was stronger than previously anticipated but will likely moderate soon, closing 2024 and 2025 at annual rates of 6.1% and 3.0%, respectively, according to the July 2024 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group.

Despite a more than 30% increase in listings of homes available for sale compared to a year ago, certain indicators of housing activity remain soft, as evidenced in part by fewer existing home sales in May compared to a year ago. This dynamic of gradually increasing supply and affordability-constrained demand is expected to cause home prices, which were up 3% on a non-seasonally adjusted basis in the second quarter, according to the Fannie Mae Home Price Index, to moderate going forward.

Additionally, the ESR Group notes recent regional volatility in listings and home prices, as many large metros in the Sunbelt, for example, now have inventory levels that match or even exceed for-sale inventories in 2019. This contributed to the ESR Group revising downward its starts and new home sales forecasts; notably, however, it revised upward its existing home sales forecast due to a modestly lower mortgage rate path.

The ESR Group made only modest revisions to its economic growth outlook, as incoming data have come in largely in line with expectations for slowing growth. Notably, due to two consecutive lower-than-expected prints of the Consumer Price Index (CPI), the ESR Group downwardly revised its inflation forecasts and now expects the CPI to end the year at 2.9% and the Fed's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Index, to end the year at 2.5%. Due to the better inflation prints and signs of slowing in the labor market, the ESR Group now expects the Federal Reserve to cut rates in both September and December.

"The housing market continues to wait for affordability to improve, even as the supply of new and existing homes for sale slowly rises," said Doug Duncan, Fannie Mae senior vice president and chief economist. "The slight decline in mortgage rates of late, following data pointing to gradually slowing economic growth, has not been enough to overcome the significant affordability constraints imposed on would-be homebuyers. As such, despite more homes being listed for sale, actual home sales have not picked up.

We continue to expect home price growth on a national level to decelerate but remain positive – over the near term, but it should be noted that conditions often vary by region, particularly as it relates to supply. For instance, many Sunbelt metros are currently seeing significant increases in for-sale inventories, in part due to new construction, while supply in much of the Northeast and Midwest remains extremely tight. In aggregate, we expect these varied market conditions to lead to a slight decline in total new home sales nationally for the full-year 2024, but a slight increase in existing homes sales."

© 2024 Florida Realtors®

Florida’s Housing Inventory Up, Prices Moderating

 By Marla Martin

June inventory and new listings rose year-to-year for single-family homes and condo-townhouse units. Single-family prices up 1.7% ($427K), condo prices remained flat at $324.9K.

ORLANDO, Fla. – Florida’s housing market in June and second quarter (2Q) 2024 showed rising inventory levels (active listings), more new listings and moderating median sales prices compared to a year ago, according to Florida Realtors®’ latest housing data.

“Florida’s economy and lifestyle continue to attract people who want to live and work in the Sunshine State – more than 1,000 people move here every day, according to Census data,” said 2024 Florida Realtors® President Gia Arvin, broker-owner with Matchmaker Realty in Gainesville. “Higher mortgage rates, rising prices and other factors continue to affect home sales, despite demand from would-be homebuyers.”

Last month, closed sales of existing single-family homes statewide totaled 23,183, down 11.1% year-over-year, while existing condo-townhouse sales totaled 8,339, down 20.5% over June 2023, according to data from Florida Realtors Research Department in partnership with local Realtor® boards/associations. For 2Q 2024, statewide existing single-family home sales totaled 74,117, down 2.2% from 2Q 2023, while statewide existing condo-townhouse sales totaled 28,982, down 9.2% year-over-year. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

Florida Realtors Chief Economist Dr. Brad O’Connor said the data may show a different picture next month, with better year-over-year figures for closings possible in July but “it would be tough to say for sure if we’ll exceed last July’s totals.

“If we look at pending inventory for June – that is, the number of properties that were under contract as of the end of the month – we can see that the gap between last year and this year is quite close for single-family homes (-2.5%), indicating we could see similar numbers of closed sales in the next month or two,” he said. “But that’s dependent on these under-contract homes going all the way through closing, which we know is not always guaranteed. The gap for townhouses and condos is a bit larger than that for single-family homes (-7.9%), although it is still more favorable than we’ve seen in recent months.”

The statewide median sales price for single-family existing homes in June was $427,000, up 1.7% compared to June 2023, while the statewide median price for condo-townhouse units was $324,900, basically the same as a year ago.

For 2Q 2024, Florida’s single-family median sales price was $428,000, up 2.4% compared to the same quarter a year ago; the condo-townhouse median for 2Q was $330,000, up 1.5% year-over-year. The median is the midpoint; half the homes sold for more, half for less.

O’Connor noted that the rate of inventory growth slowed in June, likely caused by the weakest level of year-over-year growth in new listings of for-sale homes seen so far this year.

“Year to date, new listings of single-family homes for sale are up over 16%, but in June they were only up by 6% compared to a year ago,” he said. “New listings of townhouses and condos, meanwhile, are up by over 19% year-to-date, but were only up by 4.6% in June.”

On the supply side of the market, single-family existing homes were at a 4.6-months’ supply in June and 2Q 2023, while condo-townhouse properties were at a 7.4-months’ supply for both timeframes.

To see the full statewide housing activity reports, go to the Florida Realtors Newsroom and look under Latest Releases or download the June 2024 and 2Q 2024 data report PDFs under Market Data.

© 2024 Florida Realtors®

Foreign Investment in U.S. Existing Homes Dropped

 The dollar value of residential properties purchased by international buyers decreased 21.2% YoY. Florida remains the top destination for foreign buyers. 

WASHINGTON – Foreign buyers purchased $42 billion worth of U.S. existing homes from April 2023 through March 2024, retreating 21.2% from the prior 12-month period, according to a new report from the National Association of Realtors®. International buyers purchased 54,300 properties, down 36% from the previous year and the fewest number of homes bought since 2009 when NAR began tracking this data. Overall, U.S. existing-home sales totaled 4.09 million in 2023, down 18.7% from 2022, and the lowest level since 1995.

NAR's 2024 International Transactions in U.S. Residential Real Estate report surveyed members about transactions with international clients who purchased and sold U.S. residential property from April 2023 through March 2024.

Foreign buyers who resided in the U.S. as recent immigrants or who were holding visas that allowed them to live in the U.S. purchased $22.6 billion worth of U.S. existing homes, a 3.4% decline from the previous year and representing 54% of the dollar volume of purchases.

Foreign buyers who lived abroad purchased $19.4 billion worth of existing homes, down 35% from the 12 months prior and accounting for 46% of the dollar volume. International buyers accounted for 2% of the $2.1 trillion in total U.S. existing-home sales during that period.

"Historically low housing inventory and escalating prices remain significant factors in constraining home sales for American and international buyers alike," said NAR Chief Economist Lawrence Yun.

The average ($780,300) and median ($475,000) existing-home sales prices among international buyers were the highest ever recorded by NAR – and 21.9% and 19.8% higher, respectively, than the prior year. The increase in prices for foreign buyers reflected the overall price increase for all U.S. existing homes, which climbed to $392,600. At $1.3 million, Chinese buyers had the highest average purchase price, with 25% purchasing property in California. In total, 18% of international buyers purchased properties worth more than $1 million from April 2023 to March 2024.

Canada led all countries of origin in the share of foreign buyer purchases of U.S. existing homes at 13%, followed by China and Mexico (11% each), and India (10%). China was first in U.S. residential sales dollar volume at $7.5 billion, continuing a trend going back to 2013. Canada ($5.9 billion), India ($4.1 billion), Mexico ($2.8 billion) and Colombia ($0.7 billion) rounded out the top five.

For the 16th consecutive year, Florida remained the top destination for foreign buyers, accounting for 20% of all international purchases. Texas (13%) and California (11%) were second and third, respectively, followed by Arizona (5%), Georgia, New Jersey, New York and North Carolina (4% each).

All-cash sales accounted for half of international buyer transactions compared to 28% of all existing-home buyers. Non-resident foreign buyers (68%) were more likely to make an all-cash purchase than resident foreign buyers (36%). More than two-thirds of Canadian (69%) and Chinese (68%) buyers made all-cash purchases, the highest shares among the top foreign buyer nations.

"Fostering economic investment in culturally dynamic communities, businesses, and industries is a top priority for NAR," said Alex Escudero, NAR's director of global strategy. "Our work provides members and their communities with tools, resources and data to identify and highlight international investment opportunities in U.S. real estate. This supports local communities to drive economic development in markets across the country. NAR and the Realtor® brand have developed a network of more than 8,000 international Realtor® members outside of the USA and expanded our global footprint to more than 100 real estate organizations across 78 countries, providing growth opportunities by ensuring ethical and accessible markets that allow our members to make direct connections with global-minded real estate professionals and international investors."

View the full 2024 International Transactions in U.S. Residential Real Estate report at: nar.realtor/research-and-statistics/research-reports/international-transactions-in-u-s-residential-real-estate.

© 2024 National Association of Realtors® (NAR)

Buyers: Stop Waiting for Ultra-Low Rates to Return

 By Melissa Dittmann Tracey

Fed Chair Jerome Powell: Higher rates remain necessary now because bringing inflation down sustainably  is “the absolute best thing we can do for the housing market.”

CHICAGO – About 20% of real estate professionals say that many aspiring home buyers are holding out for mortgage rates to fall before making a move – with agents calling that one of the biggest factors limiting real estate transactions lately, according to the National Association of Realtors®’ “2024 Member Profile.” But the super-low rates of the past – to the likes of 2% and 3% during the pandemic – have faded further into the rear-view mirror. Economists say buyers should stop waiting because rates like that aren’t likely to return anytime soon.

Federal Reserve Chair Jerome Powell said last week that he remains committed to keeping interest rates high until a return to 2% inflation that he believes will aid a broader economic recovery (as of this week, the consumer price index was 3%). Still, Powell acknowledged, “there’s no question that higher interest rates are making it harder to buy homes in the short term … [but] the absolute best thing we can do for the housing market and for the economy is to sustainably bring inflation down.”

Freddie Mac reports that the 30-year fixed-rate mortgage has been hovering near 7% over recent weeks, and averaged 6.89% this week. Five years ago, rates were in the 3% range.

Rates aren’t likely to be at the ultra-low averages they have been over the last 10 to 15 years. “For those thinking of mortgage interest rates—the implication has a ripple effect—buyers waiting for mortgage rates to again be at once-in-a-lifetime lows are likely going to be waiting a very long time,” says Jessica Lautz, NAR’s deputy chief economist.

At this week’s 6.89% average, home buyers with a 20% down payment on a $400,000 home would likely have a monthly mortgage payment of $2,105; for a 10% downpayment, buyers would have a $2,369 monthly payment, Lautz says.

Freddie Mac reports the following national averages with mortgage rates for the week ending July 11:

• 30-year fixed-rate mortgages: averaged 6.89%, falling from last week’s 6.95% average. A year ago, 30-year rates averaged 6.96%.
• 15-year fixed-rate mortgages: averaged 6.17%, dropping from last week’s 6.25% average. Last year at this time, rates averaged 6.30%.

© 2024 National Association of Realtors® (NAR)

Reinsurance Picture Improves for Florida

 By Jim Saunders

State and industry officials say the overall insurance market has improved since lawmakers in late 2022 passed a series of changes.

TALLAHASSEE — As Florida gets ready to enter the thick of hurricane season, property insurers have seen improvements in the market for reinsurance — critical backup coverage that helps drive how much homeowners pay in premiums.

Now, it’s a waiting game as forecasters expect a busy, and potentially costly, season.

New reports by the reinsurance brokers Aon and Gallagher Re said Florida property insurers found better prices and more availability when purchasing reinsurance coverage that took effect June 1 and Monday.

“Following several years of significant reinsurance rate increases, relatively low catastrophe activity and improved results for both insurers and reinsurers, many of Florida’s insurers experienced rate reductions at mid-year for the first time in three years,” the Aon report, released Monday, said.

Similarly, the Gallagher Re report, posted last week, said: “Following three consecutive years of double-digit risk adjusted rate increases, Florida’s reinsurance market was overdue for a pause in 2024. For the most part, this is what looks to have been delivered at the 6.1 (June 1) renewal, with risk-adjusted rates on most programs either flat, or down by up to 10%.”

But the reports also suggested the reinsurance market started to have what Aon described as hurricane season “jitters” as a series of forecasts were released this spring predicting an extremely active storm season. The reports said the ominous forecasts led to higher prices and less availability of coverage for later reinsurance purchases.

“The next few months will be critical to the outlook for (reinsurance) renewals in 2025,” the Aon report said. “One outsized hurricane loss, or a series of U.S. landfalls, this season may yet see a revision to more challenging market conditions.”

Property insurers buy reinsurance and a type of financial instrument known as catastrophe bonds to hedge against risks. Being able to offload a portion of risk is vital for insurers when big storms hit.

While many homeowners might not realize it, the costs of what is known as “risk transfer” get baked into insurance premiums. High costs and tight availability of reinsurance contributed to major property-insurance problems in recent years that resulted in hundreds of thousands of Florida homeowners losing coverage or facing hefty premium increases.

With the insurance market crumbling in May 2022, state lawmakers agreed to spend $2 billion in tax dollars to temporarily provide additional reinsurance coverage to insurers. They later approved a program that effectively offered additional levels, known as “layers,” of reinsurance funded through $1 billion in state tax dollars and premiums paid by insurers.

State and industry officials say the overall insurance market has improved since lawmakers in late 2022 passed a series of changes that included helping shield insurers from costly lawsuits. Nevertheless, the state’s Citizens Property Insurance Corp., which was created as an insurer of last resort, remains by far Florida’s largest carrier, with 1.211 million customers.

Insurers rely on a combination of reinsurance bought in the private market and from the state-run Florida Hurricane Catastrophe Fund, which can provide coverage at a relatively low cost.

The Florida Hurricane Catastrophe Fund, known widely as the Cat Fund, could provide as much as $17 billion in reinsurance coverage this year if needed. But before insurers could tap that money, they would have to pay specified amounts to cover claims. The amounts would vary by insurer, but the maximum amount for the entire industry would be $9.93 billion.

To pay its portion of potential costs, the Cat Fund is projected to have $6.91 billion in built-up cash and another $3.25 billion in borrowed money, according to a May report. It could borrow an additional $6.84 billion if it needed to pay up to the $17 billion coverage limit.

The six-month hurricane season started June 1, with August, September and October typically the busiest times for hurricanes.

©2024 The News Service of Florida. All rights reserved; see terms.

The Wealth Effect: Money Moves

 By Jennifer Warner

Florida is enjoying a positive net inflow of new residents, especially those who are wealthy and high earners, from across the country and world.

ORLANDO – Florida’s reputation as an affordable place to retire has long attracted people of all classes to the Sunshine State when their working days are done. Florida was also an acceptable place to earn a modest living while enjoying the incredible amenities and weather. The perception has long been that working in coastal employment hubs offered the best shot for those looking to climb the corporate and thus financial ladder.

Florida has worked hard to change the economy first, and its perception of it second. Investing in a variety of industries, supporting the advancement of quality education and overall raising the standard of what businesses could do here has transformed the state’s economy. It only took years of marketing and a pandemic to really rise to the top of the list of places to go for high-income earners.

Florida was certainly a net recipient of in-migration of all kinds during the pandemic. The latest estimates from the U.S. Census Bureau show Florida’s population grew by 1.6% between 2022-2023, the second highest rate among all 50 states. That equates to about 1,000 net new Florida residents each day or 365,205 total, according to U.S. Census Bureau vintage 2023 national and state population estimates.

While that trend has slowed somewhat as the drivers of migration associated specifically with the pandemic (open versus closed economy and schools, for example) have waned, Florida is still enjoying a trend of positive net inflow of people from throughout the country and the world.

In-migration cuts across all types of people, but we’re starting to see not just an influx of all people, but specifically, wealthy people and high-wage earners. To get a better sense of this trend, we took a deep dive into the data collected by the Internal Revenue Service comparing 2021 to 2022 returns. If someone moved between those years and between states, where they moved from and to were captured, along with their reported income. This allowed us to get a sense of where working age people are moving, and how much they are earning.

For this analysis of high-wage earners, we wanted to look at two subgroups of working age people, specifically those starting out in their careers, or young professionals, ages 26–34, and those in their prime working years, ages 35–54. We identified high-wage earners as those who earned over $200,000.

Between 2021 and 2022, Florida had a net in-flow of over 1,700 young professionals who earned over $200,000—the highest in the nation. Texas and Colorado took the second and third spots, respectively. For those in their prime working years, Florida had a net in-flow of over 10,600 high-wage earner, according to Census data.

California and New York were the top two states to lose high wage earners in their prime working years. This tracks with migration patterns of all people in those states, with these states reporting the highest gross out-flow between 2021 and 2022—at nearly 396,000 and 284,000 respectively. For young professionals, California and Illinois saw the highest losses, with Illinois experiencing a gross out-flow of almost 155,000 people across all age and income groups from 2021 to 2022.

Wealth migration typically was the story for retirees who cash out of expensive coastal areas elsewhere and live large in Florida’s sunshine during their golden years. Hot locations for these people included the Naples and Palm Beach area, as well as parts of the Panhandle and northeast Florida. These areas catered to this demographic who required healthcare and wealth management services as top priorities.

With wealth also coming in at younger ages, that demographic has different priorities. They need schools and offices, daycares and business centers. This younger age group has the potential to change the economies around them for a long time. Understanding this potential shift in clientele is key to focusing messaging and services to this younger and wealthier demographic.

Jennifer Warner is an economist and the Director of Economic Development

© 2024 Florida Realtors®

Lawmakers Seek to Quell Corporate Landlords

 By Holden Lewis

Renters occupy about 15.9 million single-family homes, and corporate landlords own about 3% of them. Many are concentrated in states that include Florida.

WASHINGTON – If you rent a house when you would rather own, pin some of the blame on corporate landlords.

The 10 biggest institutional investors owned more than 430,000 single-family rental homes at the end of 2023, and they continue to acquire houses to rent out to middle-class families. Corporate landlords seek to dominate the neighborhoods they target, simultaneously reducing the inventory of houses to buy while expanding the stock of houses to rent.

Members of Congress have introduced bills to force the largest institutional investors to dramatically cut their holdings.

Renting costs less than buying

The United States suffers from a housing shortage of between 1.5 million and 5.5 million units, depending on whom you ask. Institutional investors benefit from the shortage because it pushes prices higher, making homeownership unaffordable for many. The median home resale price rose to a record $419,300 in May, according to the National Association of Realtors. Mortgage rates have remained above 6.5% since May 2023.

Consequently, it costs more to buy a starter home than to rent in the 50 largest metro areas, according to a Realtor.com report in March. According to Zillow, the median rent for a three-bedroom house was $2,200 in June. That's $32 less than the principal-and-interest payment on a median-price house at the average mortgage rate in May — after making a 20% down payment. But who has $83,860 for a 20% down payment on a $419,300 house? The combination of high prices and interest rates forces many would-be homeowners to rent.

'Significant market power'

Renters occupy about 15.9 million single-family homes, according to the Census Bureau. Corporate landlords own about 3% of them. That doesn't seem like much, but corporate-owned rental houses are concentrated in a few metro areas, mostly in Florida, Georgia, the Carolinas, Texas, Arizona and California. In metro Atlanta, just three companies owned 19,000 houses at the beginning of 2022, for an 11% market share, according to research by Georgia State University geographer Taylor Shelton.

"These companies own tens of thousands of properties in a relatively select set of neighborhoods, which allows them to exercise really significant market power over tenants and renters because they have such a large concentration of holdings in those neighborhoods," Shelton said in a news release.

Shelton says the corporate landlords' market share has increased since then. "The reality is that the corporate stranglehold on the single family rental market in places like Atlanta has only gotten worse," he said in an email.

Raising rents, charging fees

Invitation Homes owned 12,726 rental houses in metro Atlanta at the end of 2023. The company exercised its market power by raising the average rent there 7.1% last year, according to the company's annual reports, while the area's median home price went up 1.3%, according to the National Association of Realtors®. Invitation also stacks up to $145 in mandatory monthly fees on top of rent: up to $40 for smart home technology, $9.95 for quarterly air filter delivery, $9.95 to manage utility billing and up to $85 for internet.

Corporate landlords raise rent and charge ancillary fees because they can. "These institutions have outsized power in our housing market, and that influence is growing," said U.S. Sen. Jeff Merkley, D-Oregon, in an email. "By 2030, Wall Street could control 40% of U.S. single-family rental homes."

How corporate landlords get so many houses

Big corporations have two main methods of accumulating rental houses: buying homes when the owners list them for sale and build-to-rent. In recent years, build-to-rent has dominated.

In the build-to-rent model, a company constructs houses that are intended for the rental market from the time the company buys the land. According to an Urban Institute analysis, construction was started on 120,000 build-to-rent houses in 2022 — 12% of all single-family starts.

The other way these companies collect houses is by buying them on the resale market. When they do, corporations have the resources to outcompete folks who browse for houses online.

Progress Residential is the largest corporate landlord, with 85,000 houses. It bought most of them on the resale market, competing with ordinary people. But Progress has an edge over people, a company executive explained in a 2021 episode of the Leading Voice in Real Estate podcast.

"We have an incredibly effective system for acquiring homes one at a time," Progress's then-CEO, Chaz Mueller, said. Every 15 minutes, the company got an update of newly listed homes in its markets. When an algorithm identified a house that met its criteria, the company's acquisition team made an offer "within a couple of hours of the home going on the market. So we're able to analyze it very quickly, make an offer. Our offers are all cash, very flexible closing, basically whenever the seller wants to move out," Mueller said.

A bill to make them sell

Merkley, the Oregon senator, has introduced a bill that would force corporate landlords to sell their houses. The End Hedge Fund Control of American Homes Act "is intended to give all families a fair chance to buy a decent home in a decent community at a price they can afford, because houses should be homes for families, not a profit center for Wall Street," Merkley said in an email.

His bill would make corporate landlords sell at least 10% of their inventories of single-family rental homes every year for 10 years or face steep tax penalties. A similar bill was introduced into the House, sponsored by U.S. Rep. Adam Smith, D-Washington.

Are corporate landlords giving people what they want?

Corporate landlords point out that they build houses in a country that needs millions more dwellings. "We continue to do our part in solving the housing shortage by providing new premium housing options in desirable family-friendly locations across the country," said David Singelyn, CEO of AMH, the third-largest corporate landlord with about 60,000 houses, in a recent earnings call.

Sean Dobson, CEO of The Amherst Group (fourth-biggest, 50,000 houses), made a similar point when he was interviewed for Barry Ritholtz's Masters in Business podcast in March. He described a family that outgrows an apartment, but can't afford to buy a house. Then the family rents from Amherst: "These are homes that [the] resident would have a very difficult time getting into without us," he said.

© Copyright 2024, The Messenger, all rights reserved.

100-Hour Work Week Needed for Florida Housing

 By Kaycee Sloan

The National Low Income Housing Coalition said Florida’s minimum wage workers currently need to work nearly 100 hours a week to afford a one-bedroom.

TAMPA, Fla. – Finding affordable housing in Florida seems to be a near-impossible task, and for those working for minimum wage, it may feel like a never-ending struggle.

A new report from the National Low Income Housing Coalition (NLIHC) found the Sunshine State is among the top 10 states that require a higher hourly wage to afford housing. So if you feel like your buck isn't stretching when it comes to finding a home, you're not alone.

The report shows that minimum-wage workers aren't making enough to afford the cost of living in Florida. While the state's minimum wage is $12 an hour, the report said renters would need to make nearly triple that to afford a two-bedroom home.

According to the NLIHC, the fair market rent for a two-bedroom is $1,833 a month. A renter would need to make about $36 an hour to afford it.

A one-bedroom is a little cheaper, sitting at a fair market rent of $1,525 a month, but still, a renter would need to make $29.33 an hour, which is significantly above the minimum wage threshold.

Additionally, the NLIHC stated that someone making Florida's minimum wage would need to work 98 hours a week to afford a one-bedroom, and 117 hours a week for a two-bedroom.

© 2024 WFLA, Nexstar Broadcasting, Inc. All rights reserved.

State Sees Across-the-Board Population Gains

 By Kristie Wilder and Paul Mackun

The Lakeland-Winter Haven area had the largest numeric gain in the population ages 0-14. Other parts of Florida have the fastest-growing working-age population in the nation.

WASHINGTON – The population age 65 and over increased in all but one (Eagle Pass, TX) of the nation’s 387 metro areas, while the population of children declined in many metro areas from April 1, 2020, to July 1, 2023.

An examination of changes in the age make-up of the population from April 1, 2020 to July 1, 2023 revealed notable growth in the older adult population, particularly when compared to changes in the population of children.

“While some metro areas saw increases in their youth population and many saw gains in working-age populations, what's particularly remarkable is the near-universal increase in the older population for metro areas across the country,” said Lauren Bowers, chief of the Census Bureau’s Population Estimates Branch.

The three age categories featured in the analysis were: 0-14 (children); 15-64 (working age); and 65 and older (older adults).

Children: Ages 0-14

The total number of U.S. children declined by 3.3% nationally, with around 80% (311) of U.S. metro areas, including some of the most populous, experiencing a decrease in the number of children from April 1, 2020, to July 1, 2023.

New York-Newark-Jersey City, NY-NJ, Los Angeles-Long Beach-Anaheim, CA, Chicago-Naperville-Elgin, IL-IN – the nation’s three most populous metro areas in 2023 – had a combined loss of around 614,000 children since 2020, accounting for about 30% of the total U.S. decline in the number of children between 2020 and 2023.

Three California metro areas – San Jose-Sunnyvale-Santa Clara, Santa Cruz-Watsonville, and Napa – had the highest percentage losses of children: 11.8%, 11.1% and 10.7%, respectively. 

The child population increased in around one-fifth of metro areas.

Lakeland-Winter Haven in Florida had the largest numeric gain in the population ages 0-14 (about 14,600) and was among five U.S. metro areas with the fastest-growing children populations. Three other Florida metro areas made the list (Wildwood-The Villages, Panama City-Panama City Beach, and Punta Gorda) and one in Georgia (Hinesville).

Working-Age Population: Ages 15-64

Between 2020 and 2023, the working-age population grew by 0.2% nationally and a majority of U.S. metro areas (about 52%) saw an increase.

Some metro areas even experienced double-digit growth in their working-age population, particularly those in the South (Florida and South Carolina) and the West (Utah).

The five metro areas with the fastest-growing working-age population were: Wildwood-The Villages, FL (19.1%); St. George, UT (14.3%); Lakeland-Winter Haven, FL (14.3%); Provo-Orem-Lehi, UT (11.4%); and Myrtle Beach-Conway-North Myrtle Beach, SC (11.1%). Punta Gorda, FL (10.3%), and Cape Coral-Fort Myers, FL (10%) also grew by at least 10% from 2020 to 2023.

These metro areas experienced growth across all three age categories.

Three Texas metro areas had six-figure gains in the working-age population during the period: Dallas-Fort Worth-Arlington (about 318,000); Houston-Pasadena-The Woodlands (about 224,000); and Austin-Round Rock-San Marcos (about 136,000).

The Dallas-Fort Worth and Houston metro areas added the most working-age residents.

The Phoenix-Mesa-Chandler, AZ, and Atlanta-Sandy Springs-Roswell, GA, metro areas also experienced notable growth in their working-age population: about 155,000 and about 124,000, respectively.

Older Adults: Age 65 and Over

The growth of the 65 and over population from 2020 to 2023 is striking: up 9.4% to approximately 59.2 million nationally. The population of older adults increased in every U.S. metro area except in Eagle Pass, TX, as previously mentioned.

Myrtle Beach-Conway-North Myrtle Beach, SC, the second-fastest growing U.S. metro area in total population between 2020 and 2023, had the fastest-growing population of older adults: up 23.1% to 107,430.

In neighboring North Carolina, both the Wilmington and Raleigh-Cary metro areas saw high growth in their older adult population this decade: up 18.4% in Wilmington and 18.3% in Raleigh.

“Increased longevity and the large baby boomer generation born from 1946 to 1964 are contributing to the growth in the older adult population,” Bowers said. “As that generation continues to age, growth in the older adult population is expected to continue across the nation’s metro areas.”

Kristie Wilder is a demographer and Paul Mackun is a geographer in the Census Bureau’s Population Estimates Branch.

© 2024 Florida Realtors®

NAR: US Home Buyer Opportunities Appear to be Opening

 By Melissa Dittmann Tracey

“The market is at an interesting point with rising inventory and lower demand,” NAR’s Chief Economist Lawrence Yun said.

WASHINGTON – More homes are for sale, yet home buyers don’t appear to be in a rush. Pending home sales fell 2.1% in May and are down nearly 7% from a year ago when home choices were much slimmer, according to the National Association of Realtors®’ newly released Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings.

“The market is at an interesting point with rising inventory and lower demand,” says NAR Chief Economist Lawrence Yun. Total housing inventory at the end of May was up nearly 19% compared to a year ago, according to NAR’s latest existing-home sales report.

“Supply and demand movements suggest easing home price appreciation in upcoming months,” Yun says. Median existing-home sales prices in May surged to the highest price ever recorded – reaching $419,300, NAR reports.

The drop in home sales last month may have been a reaction to higher home prices and a surge in mortgage rates, which eclipsed 7% last month. Sales of newly built single-family homes fell 11.3% in May – reaching the lowest pace since November 2023. Home builders blamed mortgage rates for the sudden sales contraction.

“Persistently high mortgage rates in May kept many prospective buyers on the sidelines,” says Carl Harris, chairman of the National Association of Home Builders. “However, significant unmet demand exists, and we expect mortgage rates to moderate in the coming months, which will bring more buyers into the market.”

Mortgage rates have since fallen from their recent 7% highs. NAR predicts that rates likely will remain above 6% in 2024 and 2025.

Great expectations for sales, home prices

Despite monthly blips, economists predict a robust housing market for this year and next.

“The first half of the year did not meet expectations regarding home sales but exceeded expectations related to home prices,” Yun says. “In the second half of 2024, look for moderately lower mortgage rates, higher home sales and stabilizing home prices.”

NAR released its latest outlook for 2024 and 2025:

Existing-home sales forecast

• 2024: 4.26 million (up from 4.09 million in 2023)
• 2025: 4.92 million

Housing starts forecast

• 2024: 1.38 million (up from 1.41 in 2023)
• 2025: 1.49 million

Median existing-home prices forecast

• 2024: $405,300 (up from $389,800 in 2023)—and reaching a record annual high
• 2025: $412,000

Median new-home price forecast

• 2024: $434,100 (up from $428,600 in 2023)
• 2025: $441,200

© 2024 National Association of Realtors® (NAR)