WEST PALM BEACH, Fla. — Florida is experiencing high inflation, primarily driven by skyrocketing housing costs. Among metropolitan areas with over 2.5 million residents, the Miami-Fort Lauderdale-West Palm Beach area has the highest inflation rate, reaching 9 percent for the 12-month period ending in April.
This is more than double the national average of 4 percent, as reported by the Consumer Price Index. Additionally, the Tampa-St. The Petersburg-Clearwater metro area had the third-highest inflation rate in the country, at 7.3 percent for the year ending in May.
The main factor contributing to inflation in Florida is the state’s growing population, which has resulted in increased demand for housing. This trend was further accelerated during the pandemic when remote work allowed people to relocate more freely.
Dr. Ken Johnson, Associate Dean of Graduate Programs at FAU’s College of Business, explains that the high cost of housing in Florida compared to the rest of the country is a significant reason why inflation remains a problem in the state.
Economists point out that Florida’s strong economy and absence of income tax, unlike states like New York, continue to attract people to the state. Additionally, Miami, in particular, experiences high demand for real estate from non-Floridians and international investors who seek luxury homes.
Florida witnessed the largest population growth among all states from July 2021 to July 2022 due to domestic migration. It also had the highest population growth rate by percentage, a feat not achieved since 1957.
The impact of population growth on inflation is significant as housing costs account for nearly one-third of the Consumer Price Index. The influx of residents drives demand in various sectors such as transportation, services, and housing, consequently leading to higher inflation rates.
Factors such as rising interest rates, limited housing supply in cities like Miami, and expensive property insurance have further contributed to the increase in housing costs.
Amanda Phalin, an economist at the University of Florida, explains that both the rental and purchasing markets are experiencing price pressures due to these factors. Additionally, the availability of rental units has decreased as some homeowners convert their properties into Airbnb, while certain homeowner associations prohibit renting out homes.
The combination of these factors has created an affordability crisis for long-term residents of cities like Miami and Tampa Bay, impacting their ability to afford housing in areas where they have lived for decades or their entire lives.
