The Myth of Population Growth (South Florida's Housing Savior)

As the market started to turn in 2005, anxious Realtors®, builders, mortgage brokers, and bankers assured us that South Florida was bubble-proof because of continued population growth.

Back in 2005, Mark Vitner, a Senior Economist with Wachovia Bank argued that the housing boom was sustainable due to population growth:

“Population growth has soared in recent years. The Sunshine State has added 1.35 million residents over the past four years, including 400,000 new residents in 2004 alone. The bulk of Florida’s population gain comes from net in-migration, which accounts for 87 percent of the state’s annual population increase. Most of these new residents are prime working-age adults, who are relocating to take advantage of the state’s favorable employment conditions. Population growth should remain strong through the end of the decade, with gains averaging around 370,000 new residents per year.”

The Real Estate Press, presented the now infamous urban legend on 1,000 people moving to Florida each day when the wrote back in December 2005:

“Ft. Lauderdale, like most of Florida is a thriving market, with prices on the rise. The attractive job markets and attractiveness of Florida make it a hotspot for new residents. It’s estimated that 1000 people move to Florida each day. This can only serve to increase the need for new housing, as well as making resale prices on homes jump. The US Census speculates that Florida population will be the third highest in the country by 2011.”

Back in April 2005, USA Today was also on the population boom bandwagon. They wrote:

“Florida 's developers and real estate brokers are flying high amid an unprecedented condo-building and -buying wave they hope won't end anytime soon. The frenzied spending is coming to a large extent from outside Florida — well-to-do baby boomers from the North nearing retirement, and foreigners whose money for real estate has gained potency from a weak dollar.”

“Powerful economic and demographic forces are driving the boom. Developers see an army of aging baby boomers looking for a warm place to vacation or retire. Low interest rates have made big mortgages more affordable. In the past five years, real estate has been a far a better investment than the stock market.”

However, the population boom urban legend seems to be deflating as quickly as the housing bubble. Today, the Sun-Sentinel reported:

“In half of Broward's cities, more people are leaving than moving in, census figures show.”

“‘The losses can be related to buildout and the aging of the population as children leave the house and head somewhere else,’ said Stan Smith, director of the Bureau of Economic and Business Research at University of Florida.”“Yet the population drops confirm the area's high cost of living is making Broward less attractive to families, say real estate analysts and demographers.”

There’s plenty of other evidence that the population boom was a farce. Palm Beach County, Broward County, and Dade County all faced “unexpected” decreases in public school enrollment. Florida Atlantic University recently had their first decrease in enrollment ever.

The St Petersburg Times recently ran an article that best put to rest the population boom myth:

“So it is across the state. Squeezed by rising property taxes and homeowners insurance rates, and frustrated by crowded roads and schools, increasing numbers of residents are moving from Florida, which since World War II has been one of America's favorite states to move to. To be sure, Florida remains a strong lure, particularly for retirees, but evidence is mounting that the migration boom it experienced in the first half of the decade is over:

- Public school enrollment, expected to climb by nearly 49, 000 students last school year, dropped by 3, 571, the first decline in 24 years.

- The number of Florida drivers seeking licenses in other states has increased since 2005, while the number of out-of-state drivers moving to Florida has fallen.

- Three of the nation's largest van lines moved more customers out of the state than into it last year, reversing a decades-long trend.”