Aging Canadians have looked to South Florida for affordable winter-month properties for decades, but stiff competition in the rental and homeownership markets, compounded by the rising cost of living, are making it more difficult for the nation’s snowbirds to enjoy paradise the way they once did.
“It’s a very different market,” Dr. Ann Meyerson, a licensed real estate agent in southeast Florida who specializes in working with seniors, said in a recent interview. “A lot of my clients don’t understand how tight it is…. There are no deals out there.”
Florida is booming in part because the expansion of remote work and restrictions imposed to combat COVID-19 changed the calculus on where people wanted to live, and Americans flocked to the Sunshine State in droves. Last year, the state experienced the largest net domestic migration in the U.S. with an influx of 220,890 people, in addition to 38,590 from outside the country, according to the United States Census Bureau.
Figures obtained from the Florida Department of Highway Safety and Motor Vehicles show that more than 61,728 residents of New York state alone relocated to Florida last year, with the pace accelerating this year.
That demand, along with low pandemic interest rates, has helped fuel rapid price appreciation in the state’s housing market.
According to the Federal Housing Finance Agency, Florida saw the fastest home price appreciation in the United States both in the second quarter (6.74 per cent) and for the 12-month period ending in June (29.77 per cent), the latter checking in more than four percentage points ahead of North Carolina and Arizona, the second and third fastest growing.
There are no deals out there
Dr. Ann Meyerson, real estate agent
The price paid by foreign buyers is rising in lockstep.
The median price paid by foreign buyers for real estate in Florida was $347,300 in 2021 and had increased by 33.1 per cent over the previous year, according to Florida Realtors, an industry group.
Statistics from the group show that while Canadians were still the top foreign buyers in Florida in 2021, accounting for 19 per cent of purchases, their share has dropped significantly from 2019 when Canadians made up 23 per cent of all foreign buyers.
Renters are faring no better.
An April review by Florida Atlantic University of 107 major real estate markets found Fort Myers, always a popular destination for Canadians and one that took a direct hit from Hurricane Ian earlier this month, had registered the biggest increase in rents at 32.4 per cent over the same period in 2021.
Southeast Florida — including Palm Beach, Broward and Miami-Dade counties — was a close runner up with a 31.7 per cent increase. Similarly, a recent study by Apartmentlist.com that looked only at apartments found rents in southeast Florida had surged 28 per cent over the past year.
Bob Slack, a snowbird who spends his summers in Ontario and his winters in Central Florida said he has found the rental market is extremely limited and that some are giving up on this year.
“There’s a real demand for rentals. People are especially looking for the three months: January, February, and March. And people are saying, ‘Well, nothing for 2023 so I will have to book for 2024 to find something.’”
Meyerson said that for renters, it’s a matter of taking what they can get.
“They have to want to rent for at least six months and they have to be prepared to do what the agent tells them to do. It’s very simple. If they want it, they simply have to take it for what it is because there’s nothing out there.”
Adding to the pain for both buyers and renters are the rising cost of living and the languishing loonie.
In Florida, the cost of living is 0.3 per cent higher than it is on average nationwide, according to the Composite Cost of Living Index published by the Missouri Economic Research and Information Center. Groceries ranks as the most expensive in Florida relative to national prices, costing about 5.6 per cent more than average. Overall, prices for all kinds of necessities and luxuries are up almost nine per cent from a year ago.
The loonie, meanwhile, has gone into a tailspin against the greenback.
From a peak of 83 U.S. cents in March 2021, the loonie declined by more than 10 U.S. cents, dipping below 73 cents in September. Despite some recent strength, it is still trading below its pre-pandemic level.
Accounting for the exchange rate swing, home prices in Florida are up a staggering 58 per cent from the start of the pandemic, Toronto Dominion Bank economist Admir Kolaj observed in a Florida Housing Market Report published last month.
Jennifer Lee, an economist and managing director at the Bank of Montreal, expects the loonie to remain fairly weak for the rest of the year and into early 2023.
“As long as the (U.S. Federal Reserve) continues to raise rates, the U.S. dollar will strengthen,” Lee said.
Evan Rachkovsky, director of research at the Canadian Snowbird Association, a national non-profit organization that defends the rights of travelling Canadians, said costs are definitely rising for snowbirds.
“It has gotten more expensive overall, because, now, you obviously have COVID-19 insurance coverage, and you’re also dealing with the exchange rate issue as well,” he said.
But whether that is enough to deter Canadians from winter getaways after many put such trips on pause throughout the pandemic is another question. So far, the answer seems to be, “No.”
“We have not seen a slowdown, in terms of the number of Canadians choosing to winter in Florida, and it still remains the most popular destination state for Canadian retirees,” Rachkovsky said.
The devastation caused by Hurricane Ian, which hit some of the most popular destinations among Canadian snowbirds, will only make things worse. Rachkovsky said many have decided to head to Florida earlier than anticipated to check on their seasonal properties.
“If they do have to make a claim on their insurance, they’re looking at, of course, higher insurance costs when they have to renew their policies, which will add to the cost of enjoying the snowbird lifestyle.”
Dr. Ken Johnson, a real estate economist and associate dean of graduate programs at Florida Atlantic University, says there is no doubt Florida markets are overvalued, suggesting that South Florida homes are selling at a premium of 30 per cent above normal levels.
Accelerated population growth since the onset of the COVID-19 pandemic is mostly to blame, in his mind, but there may be no going back.
“As long as people like warm weather, we are always going to have a significant share of the retirement home market but it’s not going to be as easy to retire here financially as it has been in the past,” he said.
For Slack, the Ontario snowbird, getting to Florida is still the priority. There are other strategies for dealing with high prices.
“Just cut back on your extracurriculars and going out for dinner,” he said.
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