Florida has become a hotspot for millennials.
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People are moving to Florida in record numbers, and not just retirees.Young people are being lured by the weather, a lack of state income tax, and more job opportunities.However, inflation, insurance, and healthcare can make it costly to live in the state.
Since the start of the pandemic, the US has seen a mass migration of people moving to new states, and no state is gaining newcomers more than Florida.
Florida, which has long attracted new residents thanks to its beaches and absence of state income tax, is getting an economic boost driven by young Americans seeking new opportunities. While the state benefits from this influx, it also faces challenges such as increased living costs that are sometimes less obvious, and it could hurt the residents and the state in the long run.
Florida’s population jumped by 1.9% from 2021 to 2022, with a net gain of 417,000 new residents, making it the fastest-growing state in the country. What’s more, the state has become one of the “hotspots” for millennials, according to an analysis of Census Bureau data published by Smart Asset in November. And more people may be looking to move in: A report from real estate outlet RedFin in March found that Florida dominated the list of the cities Americans want to move to the most.
“While homes in these places cost considerably more than pre-pandemic, they remain comparatively affordable,” according to the report. “The typical home in most of the popular destinations is less expensive than the typical home in the top origins.”
Young people are driving Florida’s economic strength.
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Florida’s economy is growing thanks to the newcomers
Florida’s population surge is driving the state’s robust economy and demand for housing.
The Sunshine State’s economy is projected to expand in 2024, propelled by a robust job market, according to a new report from Wells Fargo. While the authors expect some “cooling” in the state’s labor market, they believe the unemployment rate will remain relatively low, thanks to a continued surge of working-age residents.
The state has also experienced strong economic activity and a healthy job market. GDP growth surpassed the national average for 10 consecutive quarters and recorded the third-largest payroll increase in October.
“Employers continue to add jobs at a robust clip,” the Wells Fargo economists wrote. “Strong economic fundamentals fueled by steady in-migration and a flood of corporate relocations raise the odds that Florida continues to outshine the nation over the next few years.
Tampa, Florida.
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From August through September, the state’s payroll increase was projected to be 2.6% over a full year, outpacing the national average of 1.5%.
Additionally, Florida’s real estate market has not fallen as sharply as the rest of the country.
Wells Fargo notes that the 5% decline in home sales in Florida is less than half the national average of 11%. The economists cited the less expensive housing in Florida compared to the three states where the most residents are coming from — New York, California, and New Jersey.
A surge in new businesses is providing jobs for new residents
While Florida’s population is surging, it is coming at the expense of once-trendier states like California and New York.
This dynamic can be seen in data from the US Census Bureau, comparing Florida’s growth to the recent sharp decline in New York.
Net domestic migration in Florida and New York.
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In addition to the weather and tax environment, the big reason for Florida’s population surge is increased opportunities for remote work. However, there are also a ton of new businesses opening up shop in the state.
According to HireAHelper.com’s analysis of SEC filings, the number of corporate headquarters in Florida increased by 86% in the 12 months ending in March 2023, the largest growth rate of any state. Three locations in Florida — Jacksonville, Tampa, and Miami — make up the top 10 US cities gaining the most corporate headquarters.
However, despite job opportunities and relatively affordable housing, there are some hidden costs that new residents often overlook.
Florida has some costs that surprise some new residents
Florida is not immune to economic challenges. Home insurance costs and the rising cost of living present unique challenges to residents and potential homebuyers.
According to Policygenius, home insurance prices are rising faster in Florida than any other state, jumping 68% in the 12 months ending in May. Thanks to the more damaging weather, Floridians now pay more for home insurance and the second-most for car insurance compared to other states.
A woman inspects local damage in Florida after Hurricane Ian.
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Meanwhile, inflation in the state is still much higher than the national average. Of the 23 metro areas tracked by the Consumer Price Index, the Miami area saw an inflation rate of 7.4% compared to one year ago. That was the highest among all the cities and more than double the national average of 3.1% — the Tampa-St. Petersburg area was tied for second highest at 5.2% year over year.
Forbes also found in November that Florida was the fourth most expensive state for healthcare, mainly because the state’s businesses cover less of the cost than other parts of the US.
So, while Florida’s status as one of just nine states without an income tax can save new residents thousands of dollars, insurance, inflation, and healthcare could wipe out the gains.
In 2021, Miami real-estate agent Michael Bordenaro told Business Insider that up to 50% of his clients chose to leave the state within a few years of moving there.
Business Insider spoke with several people who abandoned the state, and the reasons included the increased cost of living, severe weather, low wages, and a “vacation feel” that eventually wears off.
