Early signs of a recovery in Florida’s housing market should start to quiet the chatter surrounding the state’s real-estate and migration slump of the past few years. But Florida is unlikely to return to the model of rapid population growth and construction that have helped it boom.

A surge in the cost of housing and insurance since the late 2010s means Florida no longer offers the kind of value to the middle class and out-of-state retirees that it once did. Instead, migration to Florida will now be more skewed toward the rich, who are drawn to the state’s tax code and political leaning as much as its beaches and golf courses. This doesn’t doom Florida as naysayers will suggest. But it will create winners and losers at the local level and challenges for those parts of the state that aren’t draws for the wealthy and tourists.

There are now pretty conclusive signs of a turnaround in Florida housing. The inventory of existing homes for sale there is down sharply since a year ago, driven by a mix of modestly more sales and fewer new listings. We’re also hearing more positive commentary from homebuilders. Luxury builder Toll Brothers Inc. said in February, “Most of Florida seems to have found its footing,” and PulteGroup Inc. said in April that “Orders increased in every Florida market and were up 18% statewide,” in its most recent quarter.

Lance Lambert of ResiClub Analytics noted recently that the correction in Florida home prices has eased sharply, with some metros now showing seasonally adjusted gains. The decline in inventory levels suggests that home prices in the state are set to grow from here before long.

But Florida won’t return to the kind of growth that it has counted on for decades. Immigration levels have fallen sharply, and we are now past the peak in baby boomer retirements. The youngest members of that generation are now approaching 65, and the early 2020s likely pulled forward some of this migration. Looking ahead, there are fewer Americans between the ages of 55 and 59 than there are between the ages of 60 and 64.

High costs are also a challenge in Florida, as they are throughout the U.S., but the sunshine state has the added wrinkle of rich migrants driving up costs for the middle class. A Miami Realtors’ analysis of recently released IRS migration data showed that between 2019 and 2023, Florida was the recipient of a net $137 billion in income from other states. California lost $91 billion and New York lost $76 billion. That’s one reason why home prices and inflation rose more in Florida than in the U.S. overall.

Within Florida, this wealth and migration isn’t evenly distributed. Billionaires are snatching up real estate in Palm Beach, and tech moguls, including Jeff Bezos and Mark Zuckerberg, have created a “Billionaire Bunker” just north of Miami Beach. For those with some cash to spare and in the market for a 36-acre estate with go-karts and a car museum, there’s a $115 million property for sale in Tampa.

More broadly, desirable coastal communities haven’t suffered much from the statewide slump of the past few years and should continue to thrive. The emerging bifurcation in the housing market can be seen in the S&P Cotality Cash-Shiller Home Price Indices, where Miami property prices at the high end of the market are up 1.3% over the past year whereas they’re down 3.4% at the low end of the market.

A slower-growing Florida won’t have as much job growth as it did in the past, in part because there won’t be steady gains in the working-age population. It will still need healthcare workers given its aging population, as most states in the U.S. will, though not as many construction workers. Tourism should continue to remain a bright spot — Disney is planning billions of dollars of investment into its Orlando theme parks over the next several years, and South Florida remains an international draw. More asset management and financial services jobs make sense, too, given the state’s growing wealth.

This dynamic of Florida being attractive to the rich while pricing out the middle class will create challenges at the local level that the state isn’t well-suited to address. New York and California have progressive income-tax systems that redistribute money from affluent cities such as New York City and San Francisco to the less affluent and rural parts of those states. Florida doesn’t have an income tax at all. It relies predominantly on sales taxes to fund state government and, at the local level, real estate activity and property taxes to fund services.

A shrinking middle class would hurt sales-tax revenue, and outgoing Governor Ron DeSantis is trying to repeal homestead property taxes, eliminating an important funding source for local governments. The state faces budget deficits as soon as the 2027-28 fiscal year. As DeSantis sees it, local governments can fund themselves through a mix of rich foreigners buying homes, Airbnbs and tourism.

In Palm Beach and South Florida and parts of Orlando, maybe this works. The rich can always build their own private schools and come up with money if local government services fall short. For the have-nots in the state, it’s hard to see how this all works out well, and perhaps it gives Democrats an opportunity to come back from the wilderness they find themselves in. But that’s the next governor’s problem.

_____

This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Conor Sen is a Bloomberg Opinion columnist. He is founder of Peachtree Creek Investments.

_____

©2026 Bloomberg L.P. Visit bloomberg.com/opinion. Distributed by Tribune Content Agency, LLC.