Harry and Pauline seemed very upset when they answered the door of their home. I sensed they may have been arguing before I rang the doorbell. They called a day earlier and wanted me to look at their home and tell them what I thought it could sell for. In doing my homework before going to the appointment, I saw that they paid top dollar for the home two years earlier during a real estate peak. I also saw they had it for sale for the past six months with another Realtor and it didn’t sell because it was badly overpriced. Harry and Pauline didn’t know the “pros and cons of buying a home in Florida” before they bought one.
Florida Home Prices Up and Down
Unfortunately for this newly retired couple, they bought at the top of one of Florida’s many real estate peaks, and wanted to sell at that same price even though prices were now considerably lower. This happened because there were two things they didn’t understand before they moved to Florida.
The first one is that many people who move to Florida will end up deciding it was a mistake and move out. Because Harry and Pauline never considered that possibility, they made decisions that turned out to be very costly during the move.
The other thing they didn’t know was that Florida’s real estate prices are very unstable compared to the town in Ohio where they had moved from. Florida’s home prices often rise or fall farther and faster than most other states. Unlike most US states, Florida’s real estate market is affected by a constant, large number of people moving into and out of the state. When far more people are moving in, prices soar. When that flood of buyers slows, prices usually crash. The good real estate market that allows people to sell to move to Florida usually means that they will be buying their home at or near a peak in Florida real estate prices.
Harry told me that he was the one that really wanted to move to Florida for retirement. His wife was kind of neutral about moving. There were things she thought she would like but also things she would miss. They had visited the area often, usually over the Thanksgiving or Christmas holidays and it was always warm and sunny. He said before he moved he thought that Florida weather was usually like that most of the time, warm and sunny except during the summer when it was hot. He reasoned that it was hot and uncomfortable much of the summer in Ohio too.
I told Harry truthfully what his home was worth and that it would be a while, maybe years before the home would be worth what they paid. He said he wanted to move back to Ohio now, but didn’t want to sell and “lose all that money”. I politely pointed out that he already lost it because the home isn’t worth what he paid. He said he wanted to wait until the market got better.
He called every few months until they finally decided to offer the home for what it was worth at that time. Among the many reasons for wanting out, Harry said the only time he enjoyed the weather in Florida was during the winter and he hated what seemed to him to be a summer that was three seasons long. He said his wife was miserable almost from the time they moved and she felt isolated because they were unable to find new friends in Florida like they expected. He said the time they spent living in Florida was some of the worst years of their married lives and that their happiness was more important than the money they would lose. He was ready to sell and move.
The day they signed the offer to sell that house was the happiest I’d ever seen them. They packed up and moved back to Ohio almost immediately afterwords. They didn’t even stay in Florida long enough to attend closing, choosing to just sign the closing papers in Ohio. It’s not uncommon for the sellers to do a “mail away” closing when selling in Florida because they’re already living in another state. I’ve sold hundreds of homes for people like Harry and Pauline who moved to Florida only to find it wasn’t for them.
Pros and Cons of Buying a Home in Florida
Pro- Fast equity build-up when Florida real estate prices are soaring higher than anywhere else.
Con- Losing money faster than anywhere else when Florida home prices are dropping.
Pro- Homes can be cheap compared to housing in any other state, especially after a Florida bubble bust.
Con- Buying at the top half of any boom can lead to a dramatic loss in equity value in the not too distant future.
Pro- Best in the nation homestead protection of your home equity asset.
Con- That equity can evaporate. Florida home values dropped by more than 50% during the Great Recession.
Pro- When prices tank, your real estate taxes will fall almost as fast, unlike many other states.
Con- When taxes are cut, public services are cut too and you’ll probably be negatively affected.
Pro- When the market is hot, you can sell fast for top buck even without an agent, but most won’t sell at this time.
Con- When the market has tanked it can be next to impossible to sell even with the best agent (even at a huge loss).
Pro- Pride of ownership of a home in Florida. Many homeowners would never rent again.
Con- That pride of ownership can trap and cost you a fortune if you find Florida isn’t for you.