Hey, folks! This is Palm & Property, your go-to source for Florida real estate insights tailored for savvy investors.

The Sunshine State’s market is buzzing like a mosquito at a barbecue—full of energy, a little unpredictable, and definitely worth keeping an eye on.

In this week's issue:

• 🧾 Florida considers eliminating property taxes amid rising homeownership costs

• 🌴 Market spotlight: a city experiencing a surge in rental apartment developments and population growth

• 📊 Visual: South Florida for sale inventory growth year-over-year by county

• 📈 Cities with the fastest-growing home prices in Florida

  
  …and a meme reflecting the latest public sentiment on Florida’s real estate.

No of homes sold: 25,201
No of homes for sale: 222,927

A balanced market typically has a total sales to total listings ration between 12% and 20%.

Florida Considers Eliminating Property Taxes Amid Rising Homeownership Costs

Florida lawmakers have filed a raft of bills aimed at reducing property taxes—or gutting them altogether, aiming to alleviate the financial burden on homeowners amid escalating home prices and insurance premiums. Governor Ron DeSantis supports this initiative, which would make Florida the first state without property taxes.

Key Details of the Proposal:

• Revenue Replacement: Property taxes currently generate over $40 billion annually, funding essential services such as schools, infrastructure, and emergency services. To offset this loss, the proposal suggests increasing the state sales tax, potentially doubling it from the current 6% to 12%. This adjustment raises concerns about the regressive nature of sales taxes, which could disproportionately affect low- to moderate-income households.
  

• Legislative Actions: State Senator Jonathan Martin introduced a bill calling for a formal study to assess the feasibility of eliminating property taxes and exploring alternative revenue sources. The study's findings, due by October 1, will inform the decision-making process.

Implications for Real Estate Investors:

• Market Dynamics: Eliminating property taxes could lower the overall cost of property ownership, potentially increasing demand for real estate in Florida. This heightened demand may drive property values upward, benefiting current property owners and investors.
  

• Rental Market: Investors in rental properties might experience increased profitability if property taxes are abolished, as operational costs would decrease. However, if sales taxes rise significantly, the overall cost of living could increase, potentially affecting tenants' disposable income and their ability to afford higher rents.
  

• Public Services: The potential reduction in funding for public services due to the elimination of property taxes could lead to diminished quality in areas like education, public safety, and infrastructure. Such declines might make certain areas less attractive to prospective residents, influencing property values and rental demand negatively.
  

• Legislative Uncertainty: The proposal's implementation hinges on legislative approval and public support, introducing a degree of uncertainty. Investors should monitor the situation closely, as changes in tax policy could significantly impact investment strategies and property valuations. 

While the elimination of property taxes in Florida could reduce ownership costs and potentially boost property values, investors must weigh these benefits against possible increases in sales taxes and reductions in public services.

Boca Raton Experiences Surge in Rental Apartment Developments

Boca Raton is heating up—and not just because of the Florida sun! Traditionally recognised for its affluent gated communities and retiree-friendly condos, is undergoing a significant transformation with a surge in rental apartment developments. This trend is driven by expected population growth and demand for accessible housing, particularly for younger professionals.

The Big Picture: 7,600 New Units on the Way

Developers are betting big, with around 7,600 new rental units planned or under construction. Think major projects like Terra’s 1,129-unit redevelopment of the government complex and Related Group’s 500-unit plan at the old Office Depot campus. These aren’t just random builds—they’re targeting business parks and transit hubs, perfect for a younger crowd looking for convenience and lifestyle.

Why It’s a Winner

• Jobs Galore: Boca’s job growth is sizzling at 8.4% from 2019 to 2024, beating the national average. New companies are setting up shop, bringing in over 1,000 jobs in 2024 alone. More jobs = more renters!

• Population Boom: The city’s population is climbing to 101,126 by 2025, adding about 510 new households yearly. Plus, high rollers from New York and California are flocking here for the upscale coastal vibe.

• Prime Location: Nestled between Miami and Fort Lauderdale, Boca offers big-city access with small-town charm. Think beaches, top schools, and the Brightline station—perfect for young professionals.

• High Rents, High Demand: New units are fetching $2,000-$2,940 monthly, while older properties face slight dips. This split means opportunities for both luxury and value plays.

What’s the Catch?

With 7,600 new units, there’s a chance of oversupply if demand doesn’t keep up. Vacancy rates might creep to 7.2% by year-end, so location is key. Stick to hot spots like Downtown Boca or near Florida Atlantic University to stay ahead.

Boca Raton Real Estate Market Trends

Here’s a snapshot of Boca Raton’s housing market numbers:

Sources: Redfin, Realtor.com

📊 SWOT Analysis of the Boca Raton Real Estate Market

Strengths

• Surge in Rental Apartment Developments: Approximately 7,600 new rental units are planned or under construction, signaling strong developer confidence and a robust demand for rental housing.

• Robust Job Growth: The area has seen a job growth rate of 8.4% from 2019 to 2024, surpassing the national average. This economic strength supports housing demand and attracts new residents.

• Population Growth: Boca Raton’s population is projected to reach 101,126 by 2025, adding roughly 510 new households annually, which sustains the need for residential properties.

• Strategic Location: Positioned between Miami and Fort Lauderdale, Boca Raton combines access to major urban centers with a desirable small-town, coastal vibe. Features like beaches, top-rated schools, and the Brightline station enhance its appeal.

Weaknesses

• High Median Sale Price: At $655,000, the median sale price may deter some buyers and investors, narrowing the market to those with significant capital.

• Declining Median Sale Price: A year-over-year decrease of 15.6% in the median sale price suggests a cooling market or potential oversupply, which could lower investment returns.

• Longer Median Days on Market: Properties take an average of 87 days to sell, indicating slower turnover and potentially higher carrying costs for investors.

Opportunities

• Growing Demand for Rental Properties: The influx of high-net-worth individuals from states like New York and California, alongside young professionals, is driving demand for both luxury and affordable rentals.

• Influx of High-Net-Worth Individuals: Wealthy newcomers present opportunities for investments in upscale properties or luxury rentals.

• Job and Population Growth: These trends create a broad demand base, opening avenues for residential, commercial, and mixed-use developments.

• Repositioning Underperforming Assets: Older properties can be acquired at lower costs and renovated to meet modern standards, tapping into the rental market boom.

Threats

• Potential Oversupply of Rental Units: With 7,600 new units entering the market, there’s a risk of saturation, potentially leading to higher vacancy rates (projected at 7.2% by year-end) and reduced rental income.

• Economic Uncertainty: Broader factors like rising interest rates or an economic downturn could dampen housing demand and affect investor profitability.

💵 4 Turnaround Strategies Based on the SWOT Analysis

Using the SWOT analysis, here are actionable strategies to transform underperforming real estate investments in Boca Raton:

1. Capitalize on Rental Demand

   • Focus: Target the growing rental market by acquiring older properties near key amenities (e.g., Brightline station, schools, or beaches) and upgrading them with modern features like smart home technology or energy-efficient designs.

   • Why: This leverages the strength of rental development surges and the opportunity from population growth while addressing the weakness of longer days on market for sales properties.
     

2. Target Niche Demographics

   • Focus: Cater to specific groups like students near Florida Atlantic University or young professionals near business hubs by adding tailored amenities (e.g., study rooms, coworking spaces).

   • Why: This taps into opportunities from job growth and demographic shifts, differentiating properties in a potentially oversupplied rental market.
     

3. Value-Add Renovations

   • Focus: Purchase properties with declining sale prices or extended market times at a discount, then renovate to compete with new developments.

   • Why: This mitigates the weakness of high median prices and slow sales while seizing the opportunity to reposition assets for higher rental yields.
     

4. Diversify Investment Focus

   • Focus: Balance investments between luxury properties for high-net-worth buyers and affordable rentals for younger renters to hedge against oversupply risks in any single segment.

   • Why: This strategy reduces the threat of market saturation and leverages the diverse opportunities presented by incoming residents.

• After pouring $450 million into Florida real estate, Larry Ellison plans to lure the ultra-rich to an exclusive town just minutes from Mar-a-Lago

• Cities with the fastest-growing home prices in Florida

• Florida real estate market remains robust despite agent exodus

• 3 Florida cities at high risk of a housing market crash or decline

• South Florida’s soaring condo costs are pricing out retirees on fixed incomes

Source: realtor.com

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DISCLAIMER: This is not investment advice. The information provided is for general information purposes only. No information, materials, services and other content provided on this page constitute a solicitation, recommendation, endorsement, or any financial, investment, or other advice. Seek independent professional consultation in the form of legal, financial, and fiscal advice before making any investment decision.