Florida has made the top 2 in Zillow’s list of states with the most valuable housing markets. 

The list ranks the total market value of residential real estate by state. The report cites the record-fast value growth and the record number of newly built homes for increasing the total market value of residential real estate in the U.S. 

No surprise, California topped the list at  $9.52 trillion as of December.

Florida took the No. 2 spot with its housing market valued at $3.63 trillion, up from $3.01 trillion at the end of 2021 and slightly down from last July’s $3.67 trillion. 

Florida was followed by New York at $3.32 trillion, Texas at $3.16 trillion and Washington and New Jersey at $1.63 trillion each. The next five states with the most valuable markets were Massachusetts ($1.58 trillion), Pennsylvania ($1.48 trillion), North Carolina ($1.34 trillion) and Virginia ($1.28 trillion).

Population growth is the key to Florida’s big year in real estate

The increase in the total value of residential real estate can be attributed to both higher home values compared to the start of the year and a significant increase in the number of housing units from new construction. As always, the bulk of the increase came from higher valuations of existing homes, but last year’s increase in the housing stock plays a bigger role than usual as builders have raced to meet demand.

The secret to Florida’s rise up the total housing market value ranks lies in its population increase, which influences both home values and new construction. Florida saw the biggest population increase of any state last year, according to the U.S. Census Bureau, followed by Texas.

More residents mean more competition for homes, which puts upward pressure on prices. Likely as a response to this population growth, Florida and Texas also topped the list for the biggest increase in new housing units added in 2022, both in terms of the raw number of new units and the percentage increase those units represent. 

It should be no surprise, then, that Florida (+$616 billion, or 20%) and Texas (+$328 billion, or 12%) saw the biggest gains in the total value of their housing markets last year. 

Last year, eight of the 10 fastest growing metro areas were in Florida. Although the New York City metro area is the largest metro in the country, and thus still has the highest total real estate market value, Florida markets saw the biggest gains.