Florida is the land of sunshine and beautiful beaches; you may not know that it’s also the state of cheap real estate. The state average price of homes is slightly higher than the national average, but there are many cheap cities within the state. So why are houses cheap in Florida?
Houses in Florida aren’t cheap by the national standard. But when you compare with the expensive states, slightly above $350,000 for a house seems cheap. This is because of surplus land, a high percentage of smaller homes, lower average income, natural disasters, and supply that outstrips demand.
However, the cost of homes in the state is gradually rising, with an almost 30% spike in the value of homes in the last year. This is due to the influx of new residents, gradually turning the real estate market into a seller’s market. Here, we discuss why houses are cheap in Florida.
The Cost of Homes in Florida
The typical value of homes in Florida is $356,349 after a 29.4% rise in the past year. The state has one of the fairly affordable real estate markets in the US amidst the increasing cost of homeownership. The state is the 28th cheapest real estate market among states in the US, making it a fair choice compared with other states such as Hawaii, California, and Massachusetts. What makes this further great is that Florida has one of the most beautiful environments and comfortable weather in the US.
While the real estate market in Florida is mid-range, it’s been increasing gradually in the past few years, growing faster than the national average. Of course, the rising cost of homes in the state isn’t surprising. Everyone loves its warm weather, and it has great beaches and springs. However, a significant percentage of those with homes in Florida don’t live there permanently. They only come during the winter months or for vacations which means the number of vacant homes in the state can be quite high.
The current sellers’ market that the state is experiencing has pushed home prices to a new high as many people pay more for homes in the state. The current market may not exactly reflect the true value of the real estate market, especially if it lives up to its reputation as a transient state. Even with the cost of homes being at incredible highs, it’s still a lot cheaper in many cities and towns in the state.
Factors Responsible for The Cheap Cost of Houses in Florida
There are several factors responsible for the cheap houses in the sunshine state, and that includes:
1. Surplus Land
The availability of land is one of the major factors responsible for the low cost of homes in Florida. This is especially for most of the state apart from south Florida. There’s enough land to construct homes, and there are still many places that are yet to be developed, even by the coastline. That’s not something you’ll find in many states in the US. The most expensive in Florida are in south Florida, where there isn’t so much land due to the Everglades and the Atlantic Ocean that restricts the area. Here, the prices of homes are a bit high and affect the overall median cost of homes in the state. But when you go to other parts of the state, lands, and homes are very cheap, and anyone can find a bargain in these places.
2. Smaller Homes are Common
Another factor responsible for the low cost of homes here is that smaller homes are very common, costing less than larger homes. The state has one of the largest populations of retirees in the US, with many moving there to enjoy the rest of their days in the sunshine and by the beaches. Retirees don’t need as much space as young families, and the percentage of two bedrooms and lesser homes in Florida is about 45%, higher than the national average of 39%. Smaller houses also cost less, which means the average cost of homes in the state also drops.
3. Enough Supply
While several places in the US face a shortage of available homes, driving up the cost of available homes in the state, that issue doesn’t affect Florida too much. The supply of homes in Florida matches the supply to an extent which means that as demand rises, so is supply. Many people are building homes here, ensuring that the price doesn’t get too out of hand. Unless the demand outstrips supply significantly in the coming years, the cost of homes in the city will remain quite affordable. In addition, Florida receives a high number of snowbirds and tourists annually compared to most states in the US.
4. Lower Income and Cost of Living
Florida has lower wages, making many things here cost the same as the national average. Its large percentage of retirees means the state is as productive as most of the expensive areas in the country. The median household income in Florida is lower than the national average. Thus, most of the residents here can’t even afford higher-priced homes, forcing the market to also match the spending power of the majority of its population. Jobs in many areas of Florida don’t pay that well. Foreclosures are quite common due to the low wages, even though homes are cheap.
5. Natural Disasters
As beautiful as the state of Florida is, it’s also prone to natural disasters, particularly hurricanes. This means many are skeptical about moving to the state, and even those in the state won’t spend too much on housing, given that they still have to spend more on property insurance to cover the risk of damages to their property. As a result, many people are also moving out of the state and heading for more inland states to avoid the high risk of flooding that comes with living in a state with the Atlantic Ocean, Gulf of Mexico, and the Caribbean Sea surrounding it.
Houses in Florida are cheap due to natural and man made reasons. But that may soon change if the price continues to rise at the current rate. For now, it’s still one of the fairly affordable states for real estate in the country.