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The Sarasota Area Emerges as One of the Fastest Mid-Size Markets in the US

By Lisa McNatt and Juan Arias
CoStar Analytics

Florida’s population grew by 5% between April 2020 and July 2023 as shifting work patterns and the allure of a better overall quality of life have fueled relocation interest to the state despite headwinds to affordability.

Even though concerns over escalating insurance costs – particularly in coastal areas – and elevated interest rates have forced many to hit the pause button, it has not stopped a flood of new residents from moving to Florida.

In terms of total migration in 2022, those relocating from New York comprised the largest share of the new population gained, with more than 91,000 residents choosing to become Floridians. California was next, with nearly 51,000 residents moving to the Sunshine State, and New Jersey rounded out the top three with 47,000 of its residents making the move South. The new residents from New York and New Jersey comprised 0.5% of the overall population of those states, as opposed to the 0.1% leaving California. Other states with outbound migration to Florida totaling more than 30,000 people include Georgia, Texas, Pennsylvania, Illinois and Virginia.

To be precise, the population change is not all due to inbound growth, however, as dwindling affordability has made Florida a less attainable long-term home for many. A report from Placer.ai found that roughly 14% of all in-migration to North Carolina came from Florida, perhaps a continuation of the “halfback” phenomenon, where residents relocate from New York to Florida and then move halfway back.

While the Orlando, Tampa and Jacksonville markets have attracted their share of attention for their rate of population growth since 2019, Florida’s real stalking horse market lies in the southwest part of the state. The Placer.ai report determined that growth in the North Port-Sarasota-Bradenton area is resulting in it emerging as one of the “fastest-growing midsize metropolitan areas in the nation.”

That being said, about 20% of the population migration into the area is being driven by residents relocating from other areas within Florida. Of those residents, the largest number are coming from the nearby Tampa area, at 7.6%, followed by Punta Gorda, at 4.2%, South Florida, at 3% and the Orlando area, at 2.5%. Many of these areas have experienced a surge in home prices in the past few years, resulting in diminished affordability.

Oxford Economics has also reported that one of the strongest levels of in-migration from seniors aged 65 and over has taken place in several Florida areas, including The Villages, Punta Gorda, Sebastian and Naples. The Jacksonville area also ranked in the top 25 areas in the U.S. for the fastest increase in its senior population over the past five years.

Despite seeing slower population growth than its northern peers, South Florida is expected to continue to gain residents over the next few years, many of whom are expected to relocate to the area as they retire after the age of 65. Still, population gains are set to slow from pre-pandemic growth of over 1% annually from 2010 through 2019 to less than 1% over the coming five years.

A lack of housing affordability, with South Florida ranking as the eighth-least-affordable single-family home market in the nation, according to the National Association of Realtors, along with above-average inflation, continues to affect demographic gains.

That said, Miami-Dade was the second most popular county in the nation to start a business in 2022, after Los Angeles, and South Florida’s labor market remains strong, with tight unemployment rates and continued labor force growth. Company relocations, along with elevated venture capital investment, continue to drive job growth in the area. In fact, according to the Miami-Dade Beacon Council, commitments from 57 companies looking to expand or relocate to the County were secured in 2022.

Going forward, a tight labor market, along with an inflow of high-net-worth individuals, will continue to place pressure on living costs in the area. Additionally, structural issues concerning housing availability will further bolster inflation above the U.S. average. Single-family home construction has remained limited over the last cycle relative to 2005-07 levels, and Miami continues to have the highest levels of vacation homes in the entire country, contributing further to the limited availability of housing for residents.

A rise in condo and apartment construction has tried to fill the gap between housing demand and availability, though most new condos are concentrated in luxury developments, and apartment rents have risen significantly since the pandemic. These factors will pressure lower-income households out of the South Florida area, as has been the case over the last few years, while those who decide to stay will continue to opt towards renting as homeownership in the area remains unattainable.

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