Florida Real Estate is at risk of becoming “like California”

While speaking recently at the National Conservatism conference, Billionaire investor Peter Thiel highlighted his concerns about rising real estate prices in Florida. He went on to say that Florida is at risk of becoming like California.

"The temptation on our side is always going be to just say we’re not California. We don’t like tech, we don’t like California, we don’t like the woke stuff," said Thiel, speaking at the conference. “All of that’s true," he continued, "but it’s not a way we get back to broad-based growth that’s not just some kind of real-estate racket”.

“We have all these different states where we’re trying different things, and I think DeSantis is probably the best in terms of offering a real alternative to California. But if we’re going to have a high-growth alternative, the test is, do the real estate prices come down? And the fact that real estate in Florida has melted up over the last two or three years is not evidence that you’re succeeding in building a better model than California. I worry that’s evidence you’re becoming like California.” Thiel was referencing the housing prices in Florida, which have seen a sharp price rise, particularly over the last few years.

In the previous five years, prices in Florida have risen by approximately 81%, and the trend is projected to continue for the next few years. Florida has long been a popular destination for retirees, but more and more young folk are drawn to the state. Aside from the beaches and the excellent weather, people with more conservative views are drawn to Florida, away from places like California and New York, which are much more liberal. Especially during the COVID pandemic, Florida imposed less restrictive COVID regulations and measures.

This has caused a surge in home prices, with the average home price in Florida up 58% from the start of the pandemic. This is substantially higher than the US average of 40%. Over the last ten years, the price of real estate in Florida has risen 134.94%, an annual appreciation of 8.92% per year. Although real estate has risen sharply over the entire US, this is especially pronounced in Florida, where the supply of inventory in the real estate market has been unable to cope with the increasing demand and number of people moving to the sunshine state.