Florida will be buffered against the approaching recession/depression by a wave of net migration, primarily from blue states. The wave is largely independent of the economy.
PALM COAST, FL – September 11, 2022 – The world’s economic future is uncertain, perhaps even grim. Forces are at work within our borders and beyond over which neither individuals nor businesses have little control. The world’s geopolitical tectonic plates are shifting as globalism wrestles with nationalism, capitalism with socialism, and believers with secularists. Throw in the Covid pandemic, a disrupted supply chain, and a hot war in eastern Europe, with opioid deaths, open borders, and inflation. Reasoned predictions become best guesses.
What does this mean to Floridians, and particularly to the residents of Palm Coast and Flagler County? Will we watch the value of our local housing stock decline by over 60% as it did when the housing bubble burst in 2006-2007? Will Flagler County once again have the highest unemployment rate among Florida’s 67 counties? My answer is NO. Here’s why.
There is little correlation between the infamous housing bubble of 15 years ago and today’s economic picture. The great recession was driven by the housing industry, pumped up with rampant speculation and insanely loose credit. Today’s housing market is driven by end-user buyers with cash in hand. Credit is extended only to those who can prove that they can repay a loan.
How will Flagler County and Palm Coast fare during the impending difficult economic times? Better than the rest of Florida. Florida, in turn, will outperform most other states. The U.S. with the world’s strongest economy will suffer less than the rest of the world.
Florida has always had great weather and lower taxes that guaranteed continuing population growth. But the Covid pandemic, the George Floyd-related riots, increased crime, and homelessness have combined to create a tsunami of migration from primarily blue states to red states.
While Florida was impacted by Covid, its hospitalization and death rates were below normal when the age demographics of the state’s population are considered. Flagler has one of the highest percentages of residents aged 65 or over of all Florida counties yet was consistently among the lowest among Florida counties for the number of Covid cases, hospitalizations, and deaths.
Florida’s short lockdown period meant fewer business failures and shorter periods of unemployment. Its economic recovery was quick and robust. The sense of personal freedom from lockdowns and school closings among Floridians did not go unnoticed by residents of states like New York, California, and Illinois.
During the 2 ½ years since February 2020, GOP-run states gained 341,000 new jobs while Democrat-run states lost 1.3 million jobs. When people move, they take their wealth with them. A study by the National Taxpayers Union Foundation found that the top ten states losing the most individual Adjusted Growth Income (AGI) were led by New York, California, Illinois, and Massachusetts. The states gaining the most AGI were Florida, Texas, Arizona, and North Carolina.
Post George Floyd riots, defund the police movements, lax district attorneys, uncontrolled homelessness, and increased violence and property crimes are also most visible in democrat-run cities and states. Financial security, personal freedom, children’s education, healthcare, and personal safety are powerful motivators. They transcend the economy. Somebody who is afraid to go outside their own home wants to move now. They don’t care what the price of gas is or what the inflation rate is.
While the housing market is showing signs of cooling, homeowner equity is at an all-time high. Homeowner equity promotes mobility. The need is there. The means are there. That is why Florida can count on a continuing wave of net migration, enough to likely keep the state’s housing market above water in the face of somber macroeconomics.