Florida’s housing affordability crisis is reaching a breaking point

Florida’s long-standing reputation as America’s affordable sunshine paradise is rapidly dimming under the weight of skyrocketing housing costs, unsustainable insurance premiums and crumbling infrastructure, according to a new report from real estate analytics firm Cotality.

The study reveals a state at a critical crossroads, with early warning signs mirroring California‘s housing collapse that triggered a mass exodus of residents.

Housing costs outpace wage growth

The numbers paint a dire picture of eroding affordability. Florida’s median home price reached $393,500 in October 2024, while Miami’s median price sat at $629,575. In August, the median monthly rent in Miami was $2,944 — a 42% jump since 2020.

Homeowners now spend 35% to 45% of their income on housing costs, far above the recommended 28% threshold, Cotality explained.

“The last 25 years have seen home prices, homeowners’ insurance, and property taxes surge in Florida,” Selma Hepp, Cotality’s chief economist, said in the report. “When you add in the unflagging migration that is straining public services and inflated costs across the board, many households are finding it increasingly difficult to stay in the state.”

Migration wave reshapes Florida economy

Florida gained nearly 2.76 million new residents between 2021 and 2023, but the demographic shift tells a troubling story.

Sixty-eight percent of new arrivals earn more than $100,000 per year, with the average income for newcomers 59% higher than that of longtime residents. Cash buyers dominate the market, accounting for 42% of home purchases.

New York remains the top feeder state for Florida at 18% of all incoming residents. It’s followed by California at 6% — double its share in 2020. Texas, Georgia and New Jersey also account for large numbers of migrants to Florida.

“The influx of high-income residents has fueled economic growth but deepened inequality,” said Pete Carroll, Cotality’s executive vice president of public policy. “Recent proposals to eliminate property taxes could accelerate these trends while raising questions about funding essential services.”

Population growth in Tampa has significantly rebounded with nearly 52,000 new residents in 2022-2023, up from a loss of nearly 13,000 in 2019-2020.

Insurance market freefall

Florida’s property insurance crisis has reached catastrophic levels with average annual premiums jumping 60% since 2019, Cotality reported.

Seven major insurers have withdrawn from the state since 2022 and nearly one-quarter of Florida homeowners now rely on the state-backed Citizens Insurance program. National Flood Insurance Program participation remains very low in high-risk areas at 17%, according to Cotality.

A 2024 near miss from Hurricane Milton exposed the system’s fragility as Tampa has 1.1 million homes vulnerable to hurricane winds and 540,000 properties at risk of Category 5 storm surge. Potential damage from a direct hit is estimated to be $133 billion.

“Had Milton hit Tampa directly, we would have seen generational damage,” said Tom Larsen, Cotality’s insurance expert. “The insurance gap could have bankrupted thousands of families.”

Infrastructure and population pressures

Florida adds the equivalent of Tampa’s population (400,000-plus) annually, straining numerous sectors of infrastructure. Commute times increased 11.4% over past decade, with Miami drivers losing an average of $1,000 per year to traffic congestion costs.

More than 40% of water mains across the state are at least 50 years old. Daily water leaks are plentiful enough to supply 1.2 million homes with $16 billion needed for infrastructure repairs, according to Cotality.

The company identified three areas for intervention to change Florida’s overall trajectory.

1. Insurance reform
   • Create a reinsurance catastrophe fund
   • Strengthen building codes statewide
   • Mitigate frivolous litigation
2. Targeted housing construction
   • Incentivize middle-income developments
   • Streamline the permitting process
   • Address the construction labor shortage
3. Infrastructure investment
   • Modernize water/wastewater systems
   • Expand public transportation
   • Implement smart growth policies

“Building codes require a balancing act between costs and resilience,” said Jay Thies, Cotality’s construction expert. “We need solutions that protect homeowners without pricing them out.”