Transcript of Why People Are Thinking Twice About Living in Florida

For a lot of people, moving to Florida sounds like a dream. Where people come to play and where the fortunate come to stay.

So you have sunny weather, that tropical climate that makes you feel like you're on vacation.

That's our colleague Deborah Costa.

You have these gorgeous beaches that arguably are the best beaches in the country. There's gorgeous golf courses everywhere you look. Swaying palm trees, warm brews, balmy weather. The ocean water is extremely warm.

In addition to warm waters, there's also no individual income tax, less business regulation than a lot of other states, and a humming economy. So many people have moved to Florida over the past few decades that it's even earned a name, the Great Florida Migration.

So the state of Florida has consistently been growing quite a bit. It suddenly became this promised land, this exciting place to migrate to and buy cheap land and create a new life for yourself.

Florida's population grew even faster during and after the pandemic. The latest US data shows that Florida is the fastest-growing state in the nation.

Chances are you've noticed this trend when you drive around town or try to buy a house or rent an apartment. As a result of all these new residents, the housing market has been hotter than the weather. Florida real estate over the last decade has just shot off. Prices have more than doubled in that time period. I'm talking median prices. If it's waterfront, then it's quadrupled. Wow.

But now, after a string of damaging storms, there are signs that parts of the real estate market are stalling out. For some homeowners, Florida no longer seems like such a great place to live. Homeowners like Dominique Tomlinson.

Honestly, at this point, I don't care if I lose every dollar of equity I have in that house. I won't go back and live like that. Again, it's not worth the mental stress. It's not worth any of that. It's probably not sustainable for people like me and my husband who are just trying to make a life here.

Welcome to The Journal, our show about money, business, and power. I'm Ryan Knutson. It's Monday, October 21st. Coming up on the show, The Great Unraveling of Florida's Once Booming Housing Market.

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Brought to you by AdoptUS Kids, the US Department of Health and Human Services, and the Ad Council. Dominique Tomlinson is a teacher, and she's one of the millions of people who moved to Florida over the past decade. Her family moved from New York in 2014.

We really love it here. I think, obviously, the beaches are a huge draw. We have some of the most beautiful beaches, but we also love downtown St. Petersburg. It's a very eclectic area. There's a lot of art down here. There's so many awesome restaurants.

In 2020, As the housing market heated up, Dominique was one of the many people trying to take advantage of low interest rates.

I think for a lot of middle class people or people like teachers like me, a home is a way that you can build wealth. And so that was really what drew me into buying a house. So I bought my house by myself in 2020.

Dominique closed on a three bedroom house for about $200,000. It's a little seafoam green bungalow in a community called Shore Acres. On Florida's Gulf Coast. She finds an opportunity to purchase a home just at 29 years old.

And so she buys this adorable little cottage in a low-line coastal neighborhood in Tampa Bay in St. Petersburg.

I think it was built in the 1960s. It has a pretty large living room and then a smaller kitchen.

And her dad is a contractor, so he helps her turn it into her dream house.

I designed my kitchen. I picked out all the cabinets, the backs splash, all the appliances, every little fixture.

She basically created her own little dream house in her 20s, which is so amazing.

And it was like my own little piece of heaven, I guess. It was my oasis. It was my home. I felt like I built it.

She settled in and thought, This is going to be perfect.

After a two-month renovation, Dominique moved in in August of 2020. A few months later, in November, a small tropical storm started lashing the Coast. At first, Dominique thought nothing of it.

I went to bed as normal, and I woke up probably around 12:00 in the morning, and my shoes were floating in the living room. I didn't even dawn on me like, Oh, your house is flooding. So I opened the front door and I was like, Where is this water coming from? And there were little waves lapping into my front door.

That was just the first time Dominique's home flooded. It's flooded three times in the four years she's lived there. Last August, her home was flooded with two feet of water. And then last month, during Hurricane Helene, the floodwater has reached four feet in her living room. Dominique says she learned to prepare for these floods. She started keeping track of the tide charts and elevating her furniture to try to prevent water damage. But it's all becoming too much.

I mean, when I met her, it was right after Hurricane Helene, and she's telling me who could live in here. I mean, it floods consistently.

Hurricane Helene forced Dominique to confront an uncomfortable question, whether her time in Florida, the state that she loves might be coming to an end.

Yeah, it's definitely a consideration. The facts are the facts, and the Gulf is hotter than it's ever been. And I don't think the hurricanes are going to I think this might be our new reality, and I'm not sure it's a reality I want to live with.

And it's not just Dominic who's reaching her breaking point. That's next. After years of going up and up, Florida's real estate market has started to plateau, and it's because of more than just hurricanes. The first thing to really squeeze the market happened in 2021.

The search and rescue efforts that continue in South Florida right now more than 24 hours after half of a condo building collapse.

The Surfside condo building collapsed in the Miami area, killing 98 people. After Surfside, the state passed new safety regulations aimed at preventing another collapse. That meant that a lot of old condo buildings throughout Florida would need to be reassessed and possibly upgraded. And all that was expensive. And those expenses were passed on to the owners.

It was like it was an illusion that these condos were as inexpensive as these people were buying them for because all these costs were getting kicked down the road. Nobody was addressing them. Then it was suddenly this big red flag emerged with this condo collapse, this tragic collapse that showed us, Wait a second. These condos need a ton of maintenance. We need to pour a ton of money into this. They're not as cheap as we thought they were. And that also affected insurance.

And the collapse had a broader impact on insurance premiums throughout the state.

It's part of what has affected this rise in insurance rates that we're seeing right now. That and, of course, all of the stronger and stronger hurricanes that are hitting the state of Florida have combined to create this. Really, it's an insurance crisis. Some people are having to sell their homes because they can't afford the insurance on them.

Because the state is becoming a riskier market, insurance premiums in Florida have exploded. People are paying as much as 400% more over the past five years.

It's forever transformed the way that we look at real estate in the state of Florida.

The other thing, of course, that's driving insurance premiums up are the storms. Florida has always dealt with hurricanes, but the storms are now intensifying so rapidly that they're shocking to even the most seasoned Floridians.

I mean, there was a very well-known meteorologist in South Florida and Miami who was crying on air because he couldn't believe how quickly Hurricane Milton was intensifying in the Gulf.

It's just an incredible, incredible, incredible hurricane.

It has dropped It has dropped 50 millibars in 10 hours. I apologize. This is just horrific. Because they've never seen anything like it before. And And Hurricane Helene didn't even hit the Coast of Tampa. It just skirted past it, and it created this havoc.

For the past couple of weeks, our colleague Deborah has been driving up and down the Florida Coast, surveying the damage wrought by hurricanes Helene and Milton.

It's really tragic to see. It looks like, I don't know how to describe it. It's just hundreds of homes, all with Appliances, furniture, mattresses, chunks of wall, debris, like mountains of this stuff in front of each of the homes. And it all smells, as you can imagine, terrible. It's like rotted pieces of people's lives.

In flood ravaged communities, especially in the Tampa area, some people are second-guessing their decisions to buy there. Homes are going up for sale, but there's little interest. Meaning owners are slashing prices multiple times and still not getting offers. In St. Petersburg, Deborah met a homeowner whose For-Sale sign was ripped off his lawn by rushing floodwaters. As she spoke with people, Deborah heard the same thing over and over again. Selling a house in coastal Florida is becoming really, really hard.

Which is so wild because just a few years ago, you had people outbidding each other for these homes, and now you can't even sell them for the same price. And so what we're seeing is a flattening out of the market at the moment. And there's a bit of a fear that there could be a price correction around the corner. And so we're waiting to see what happens. But, yeah, things definitely look different than they did a few years back when everybody was excited to make their way down to Florida.

There's one other thing that's hurting Florida's real estate market, interest rates. Across the country, mortgage rates are up to above 6% double from where they were during the pandemic. What is this going to mean for Florida if there are so many houses that are flooding like this and insurance premiums are so high that people can't afford it? What is it going to mean for the state?

A lot of people in the middle class, unfortunately, have chosen to leave the state of Florida or have chosen to leave these coastal areas for more inland areas that don't flood as much. So 85% of the homes in Dominique's neighborhood flooded. The ones that didn't flood are the brand new homes that were built really up high or on stilt for much more money than what Dominique paid for her home. It's a totally different new housing stock, and it's a totally different new group of people that can afford to buy those or build those. Unfortunately, they're not teachers like Dominique. Unfortunately, it's become unaffordable. It's become a situation where where this dream that they thought that they had built for themselves is not the reality.

What does that say about who can afford to live in Florida?

What we're seeing is people like Jeff Bezos, Ken Griffin, hedge fund billionaire. That's the type of person that we're seeing come to Florida in droves, and Droz. You see it in the census data. The incomes of people that are moving to places like Miami are astronomical compared to those who are leaving, the people are leaving are all making middle class salaries, then they just can't afford to live in these areas anymore, unfortunately.

So Florida is becoming a land for the rich.

Yeah, I would say, specifically in these coastal areas, waterfront property is becoming definitely the enclave of the rich. It used to be attainable for retirees and others of modest income, but it's no longer the reality. It's unfortunate, but it's becoming an area where only the rich can play.

Dominique is now considering selling, but she doesn't expect anyone to buy her house. She thinks it's more likely that someone will just want to buy it for the land underneath.

I think Florida will always be here. At this point, it's like maybe it's for wealthy people who can afford a second home to live in these coastal areas. And I think a lot of what's going to be left in communities like Short Acres are the people who can afford to knock down their home and rebuild or can afford to finance lifting their home on their own. It's definitely sad to think about leaving here because I've built a community and I love my coworkers and my friends. So it's definitely sad. But I think it would be somewhere we would still try to visit as much as we could. But we'll see if that's the direction we head in.

That's all for today, Monday, October 21st. The Journal is a coproduction of Spotify and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts throughout every weekday afternoon. Thanks for listening. See you tomorrow.