Florida, The Least Affordable State
What Does It Mean For You?
When you have a headline telling you Florida is the least affordable state in the US, it grabs your attention. Mainly from people who live far away and have no interest in living in the state.
However, it is an issue to consider for those who live here or who harbor desires to reside in Florida. What it means to you depends on many factors, and for some, this is likely to be positive news.
At Naples Relocation Experts, we take the time to know you and what matters to you when searching for property in Naples, FL. Contact us today, and we’ll make sure you know what Florida being the least affordable state in the United States means for you.
Why do people want to live in Florida?
Before we focus on the cost of living in Florida, it is helpful to consider why so many people are keen to live in this part of the country. After all, if no one wanted to live in Florida, the cost of living here wouldn’t be an issue.
Yet, there are many reasons why Florida is perfect for many people, including:
- The climate is exceptionally welcoming, with close to year-round sunshine
- Florida residents don’t pay state income tax
- Residents receive many discounts on many of the fantastic Florida tourist attractions
- The Florida lifestyle is hugely appealing, with so much to do inside and out
- There is a buoyant job market, and in recent years, significant financial companies like Goldman Sachs and Elliott Management have moved to the state
- Florida is a great place to retire, so even if you are planning for the long-term, you can put roots down here
- Florida is well-connected, so if you want to travel out of state, you can do so easily
Any single factor here would be enough for some people to consider living in Florida, so having an abundance of reasons makes the state a fantastic destination.
Why is Florida rental property so expensive?
Having stated why there is so much demand for property in Florida, the simple economics equation of supply versus demand comes into play. With so many people looking for a home in the property and rental market and so few available houses, prices rise. This is the case with rental property, as it is for housing.
Other factors which lead to people spending more here include:
- Exposure to the ocean and the associated weather conditions leads to higher than standard maintenance costs for property
- There is a tourist development tax as well as property tax
- While there is year-round demand for Florida property, some seasonal elements cause further spikes in demand, further increasing prices
The interesting case of property tax in Florida
With no income tax payable in Florida, the state generates income in other ways, including property tax. You will find local sources who state “Property taxes in Florida are some of the highest in the country”, but this isn’t the case in every location.
In general, the average property tax in the state is less than the US average, 0.98% compared to the national average of 1.08%. However, each state sets its own rate.
In Collier County, the average effective property tax rate stands at 0.71%. This is considerably less than the national and Florida average. The cost of property in Collier County means the average tax payment is higher than in many other counties, but in proportion, is better value than in many locations.
A change in buyer behavior
Another factor relates to the change in tenant activity since the pandemic. A new wave of tenants who routinely pay hugely inflated fees in locations such as New York are happy to pay higher than usual prices in Florida, as it feels cheap compared to what they are used to.
A 10,000-square-foot property in an illustrious part of New York costs $50 million, and in California, a property of this size costs $30m. For these buyers or tenants, who are flocking to Florida in more significant numbers, a $50,000 monthly rental fee is easily within their budget. So, when tenants are willing to pay higher fees, landlords set their prices in line with these expectations, and overall market prices increase.
It’s also not an exaggeration to say, Naples, FL is welcoming younger buyers than it has before, even though all demographics and ages are still flocking to the area. The events of recent years, coupled with greater workplace freedom, means many households have re-evaluated what is important to them. To many, sunshine, outdoor activities, and a chance to have fun is essential, and where better to enjoy these things than in Florida, and Naples, FL, to be precise?
Right now, Naples, FL is where it’s at for so many people, and this doesn’t look like changing in the foreseeable future.
With all these factors in play, it is no surprise Florida ranks as the least affordable state in the US. Even if you intend to rent for six months to a year to get to know the area before committing to a property purchase, be prepared to pay a significant sum for the privilege.
What do these prices mean for you?
High rental costs impact many people, but they don’t affect all individuals or households in the same way.
If you are looking for a high-end property investment that provides a considerable return each month, the demand for Florida rental property is welcoming.
If you are interested in building a short and long-term return, investing in the Florida property market makes sense. The factors that drive demand and increase prices are unlikely to diminish. So, this is still an opportune time to enter the market.
At Naples Relocation Experts, we understand the needs of property investors and tenants. We help you find the best property for your budget and the requirements of likely tenants. The demand for Florida property will always be present, and with the right help, you can capitalize on it.
Anyone looking for a second home or planning on relocating needs to consider their budget and what they can afford to pay. There is no denying that Florida’s lifestyle appeals, which is a massive factor in why so many people want to live here.
To enhance your chances of finding the most appropriate property in the area, work with a local expert. When you deal with a specialist estate agent who gets to know you and what you are looking for, they search for properties on your behalf. They likely have properties in their portfolio that are of interest to you.
At Naples Relocation Experts, we know the local area, so you don’t have to. We’ll present you with the best properties for your budget and lifestyle. If we can do anything to help you find an affordable property, we will, but rest assured, you’ll receive value for money at every step of the process.
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