Florida’s popularity as a destination for transplants has caused a significant increase in housing prices, which has diminished the state’s reputation for affordability. According to RealtyHop Housing’s May affordability index, Miami now holds the title for the least affordable housing market in the United States. The median price for a home in Miami is a staggering $585,000. To afford this, homeowners must allocate nearly 80% of their monthly income towards housing expenses, surpassing other expensive cities like Los Angeles, Newark, and New York.
Hialeah, another city in Florida located near Miami, also made it to the top five least affordable cities, with homeowners spending 65.79% of their monthly income on housing expenses. The surge of Northeasterners relocating to Florida was motivated by the desire to lower their rent costs and pay fewer taxes. However, this influx of new residents has led to increased mortgage rates, eroding the state’s reputation for affordability.
Daryl Fairweather, the chief economist for Redfin Corp., stated that the increasing cost of living in Florida makes it less attractive to potential homebuyers. Furthermore, RealtyHop’s report warns that Orlando’s affordability may also decrease in the future, as the city jumped seven spots higher in the affordability ranking. Increased demand from buyers has driven up asking prices, despite an increase in housing inventory.
While the number of people moving to Florida has decreased over the past three years, it is still a popular destination. In 2021, 62% more people moved into Florida than out, followed by a decrease to 58% in 2022, and currently standing at 56% in 2023. RealtyHop’s report confirms Miami as the most unaffordable city in the country, with Hialeah, Orlando, St. Petersburg, and Tampa also experiencing increasing costs.
Interestingly, high-earning residents from cities like New York, San Francisco, and Chicago appear to benefit greatly from Florida’s lower cost of living and absence of state income tax. According to SmartAsset, a Manhattan resident earning $650,000 per year could save $195,000 by moving to Miami due to the city’s lower taxes and living expenses. Furthermore, even those earning $150,000 per year could save nearly $50,000 by relocating to Miami. The overall cost of living in Miami is significantly lower than in Manhattan or San Francisco, where expenses are well above the national average. Chicago residents, while experiencing a slight reduction in living costs, may not see as much financial incentive to move to Miami beyond the more desirable weather.
In conclusion, Florida’s surge in transplants has led to increased housing prices, resulting in a decline in affordability. However, high-earning individuals from expensive cities may find significant financial savings by relocating to Florida, particularly in Miami. The state’s lack of income tax and relatively lower cost of living make it an attractive option for those looking to maximize their earnings.
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