As if the COVID-19 pandemic and political unrest last year and, of course, going into this year, aren’t enough, the Census Bureau started reporting population counts and Florida is one of the states at the top of the heap.
Florida’s population has been growing for the last 10 years, making us the third-most-populous state in the country after California and Texas. Coming from New York, I’m always surprised to hear from friends and relatives that they had no clue Florida’s population surpassed New York State’s. This occurred back in 2014 with a slight margin that has grown every year since then.
According to the U.S. Census Bureau, Texas, Florida, California, North Carolina and Arizona were the states with the biggest population growth from 2010 to 2020. Florida’s gain during that period is just under 3 million residents. The states with the biggest declines during the past 10 years are Vermont, Connecticut, New York, West Virginia and Illinois.
These numbers, however, do not reflect the mostly coastal states and Illinois that have lost population from July 2019 to July 2020. Much of this decline may be contributed to the pandemic but chances are the numbers will decline even more when the balance of 2020 is counted, when people started relocating. In addition, Texas (373,965), Florida (241,256) and Arizona (129,556) are the top three states in the country that have gained population this year.
It’s no surprise to anyone who is even remotely interested in the real estate market that people are leaving high-taxed states and embracing Florida’s low-tax and friendly business environment. This year the number of people relocating to Florida from other states has exploded and now many companies are looking to Florida and Texas to relocate their businesses.
After almost a year of running businesses remotely, corporations are starting to understand they don’t need the expense and inconvenience of a bricks-and-mortar building to operate. They can offer their employees alternatives increasing both their bottom line and that of the company. Miami, in particular, is attracting major financial investment companies, a few of which have already relocated and others considering the move.
As previously stated, COVID-19 is certainly playing a big part in the movement of populations. But a lot of this started after the 2017 tax reform, which included a cap on state and local tax deductibility on federal income taxes. States with high personal income tax and exorbitant property taxes that could no longer be fully deducted had residents sharpening their pencils at tax time. Many upper-income families decided it just wasn’t worth the taxes they paid to stay in certain states and started looking elsewhere.
With a new administration in Washington, it’s possible that the tax reforms of 2017 could be reversed. This could have somewhat of an effect on people’s decisions to move, however, paying $30,000 a year in property tax is not the same as being able to take a tax deduction on that amount. So, the real estate community will wait and see if a different national tax environment changes the movement of populations to the sunbelt, which started well before the tax reforms of 2017.
Florida frequently is the subject of jokes from more sophisticated regions of the country. Dave Barry wrote a whole book about it. But based on the 10-year population growth, no one really cares. I-10 and I-95 are jam-packed with moving trucks headed south and properties are selling in one day.
Make room Floridians – we ain’t seen nothing yet. Stay safe.
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