June 10, 2006

Florida Trend magazine reports in its 2006 Economic Yearbook that nearly 1,900 people move to our state each day.

This amazing growth is offset somewhat by an average of 945 people moving outside Florida. When you add in a daily birthrate of 115 babies for the Sunshine State, we have a net population growth of about 1,060 per day.

According to Florida's Office of Economic and Demographic Research, by this time next year, there will be nearly 19 million people that will call Florida home. Out migration coupled with the expected number of deaths (171,000) results in a net increase of more than 355,000 people added to our state in the next year. St. Johns County, for example, grew by 39,306 people between the last two censuses (1990 and 2000). This is an average of 4.69 percent per year. This rate is projected to accelerate between 7 and 9 percent per year in the near term.

I am often asked "where are the buyers for all these new residential developments that are either underway or in the planning stages?" These aforementioned demographic changes and other factors have an important, direct impact on our residential real estate market. It is easy to imagine the effect of new arrivals creating more demand for homes, condominiums, apartments and services. As demand goes up for places to live, growth in the need for new homes (and prices) is sure to follow. In a complementary fashion, the need for more services and for the people to perform them drives the creation of jobs, which further increases housing demand.

Jobs are the leading reason that new residents move to the Sunshine State. About one-third of those surveyed in Florida Trend's annual report gave this as the primary reason for relocation here. However, employment as a reason is more likely to be given by someone less than 55 years of age.

Stanley K. Smith of the University of Florida's Bureau of Economic and Business Research reports in a 2005 study "Florida Population Growth: Past, Present, and Future," that those 55 and older indicate that the climate is the most likely reason for moving to Florida.

The general increase in Florida's population as people move here from other parts of the United States and from foreign countries is commonly known. What is not as readily apparent is the tremendous effect of movement within the state. The Internal Revenue Service tracks these intra-state movements and issues a county-to-county migration report. The IRS's most recent report for 2003-2004 reflects this and shows that the leading point of origin for a new resident in almost all Florida counties is from another county right here in Florida.

If you thought that most of the people moving here were retirees, you may be surprised to know that about 44 percent of those moving here are under age 35. In contrast, the newcomers over age 65 comprise around 15 percent of all new arrivals. Smith further reports that Florida is second only to West Virginia in terms of median age and it's considerably higher than the national median age of 35.3.

However, younger people also tend to be those with the highest levels leaving Florida while the seniors tend to stay. The net effect on migration is about one quarter of all new Floridians are 65 or older. You can see the impact of senior growth in real estate here in Northeast Florida as builders react to the increasing number of older customers by providing communities that are adult oriented, activity-rich, with amenities and services that consumers in this growing age group want in their retirement communities. These changes are predicted to accelerate as the baby boomer generation retires (and relocates) to warmer climates.

Florida is expected to pass New York in this decade and will be become the third most populous state in the nation. Reasons for moving here will vary, but whether it is for employment or climate, the effect on homes, services, natural resources and government will be significant. Growth certainly presents challenges, but these newcomers also will help drive the many positive aspects of our economy and real estate market for the foreseeable future.