Florida’s real estate and rental markets were strong in 2021. With home prices soaring, demand low, and vacancy rates declining, it was a good year for sellers and investors alike. Looking ahead to 2022, there are indications that another strong year is ahead.
While nationally there are signs of price stabilization and normalization, there is good reason to believe that Florida will see above-average price growth, appreciation, and rent increases. There are a few factors impacting this, including:
- The state’s ongoing and steady population growth. Florida’s population has seen high growth over the last decade, which has only increased due to population shifts caused by the pandemic. According to Ricky Doty of the Bureau of Economic and Business Research at the University of Florida, “Some 1,000 new residents moved to Florida from other states every day in recent years, an overwhelming number of them retirees lured by sunshine, low taxes, and a more relaxed culture.”
- Increased demand, specifically from millennial buyers. The state is seeing younger buyers moving from larger cities to Florida, where they are able to afford more house and have more space. The housing supply was lagging behind demand before the pandemic, and the issue has only gotten worse. Ken Johnson, a real estate economist at Florida Atlantic University, explains that “since the pandemic hit in March 2020, there has been a huge imbalance in housing supply and demand in Florida. Along with strong in-migration, we have an ongoing shortage of inventory. For the last 15 years, the supply of new homes has not kept up with population growth.”
- Rental demand continues to be high. The state has high numbers of renters – for example in the Miami-Dade area around 70% of the population rents. Additionally, rental vacancy rates have fallen steadily over the last couple of years and are the lowest they’ve been since 2005.
The combination of these factors indicates that 2022 will be a good year for Florida’s real estate and rental markets. And, there are some areas of the state that offer investors particularly high returns and good long-term outcomes. Here’s an overview of five of the best places to invest in Florida in 2022.
Jacksonville is an attractive location due to its amount of population growth and the strength of the local economy. The area’s population has grown by 19% over the last nine years and the Jacksonville area now has over 1.5 million people. In addition, the workforce is growing, particularly when it comes to high-paying jobs. The Jacksonville area is home to four Fortune 500 companies, a thriving healthcare and bioscience community, and a strong auto parts industry.
All of these factors, combined with a cost of living below the national average and a below-average tax rate make it a good bet for investors.
The Orlando metro area has around 2.5 million people, 60% of whom are renters. Additionally, the area is steadily growing and recently was ranked #2 in a Forbes list of the fastest-growing cities in America. The area’s economy is strong and has recently been bolstered by the return of national and international tourists. The area’s unemployment rate is low and the economy is growing.
The median home value in Orlando is around $260,000 and the median rent price is just over $1,600. Plus, given the huge amount of tourism in the area, Landlords have the option of considering both long-term residential rentals and short-term vacation rentals.
The Tampa metropolitan area has around 4 million people and continues to grow. The area has the benefit of having a large population and lots of tourism, resulting in high demand for real estate. The current median home value is around $251,000; however, as the area continues to grow, above-average appreciation is expected. This makes the Tampa area a good option for investors planning to buy and hold.
The median rent price in Tampa is around $1,600, and the area’s cost of living is 5% below the national average. Rent prices in the area continue to rise as the vacancy rate falls. This is a good combination for Landlords and makes the area an attractive one for real estate investors.
Lakeland, Florida is a smaller community conveniently located between Tampa and Orlando. It’s an area that offers affordable housing and is currently seeing around 3.2% annual population growth. The area’s median home price is around $155,796 and the average rent is $1,084.
For Landlords looking for a lower entry price, this is a promising area. Additionally, nearly half of the population rents, helping to keep rental demand high. That, coupled with the anticipated growth in the next few years, makes this a good option for investors.
Ocala is another smaller, inland city that has a lot to offer investors. The area attracts a large number of retirees and has a stable economy that does not depend on tourism. In addition to retirees, the area has more recently attracted commuters looking for affordable housing. With a metro area of around 300,000, Ocala has had some of the highest population growth nationally for cities of its size in the last decade. The median home value is around $162,000 and the average rent is $1,071. Similar to Lakeland, it offers a lower entry cost and the potential to see substantial appreciation and rental price growth.
Get the Most Out of Your Investment
Once you’ve found the right property, it’s important to make sure you protect it and get the best return possible. Two things to focus on from the outset are finding great Tenants and having a thorough Florida Lease. Proper Tenant Screening ensures that you only rent to qualified Applicants, and a good Lease makes sure you’re protected should anything go wrong. With those key tools, you should be prepared to get the most out of your Florida investments in 2022.