Florida’s once red-hot housing market is experiencing a significant recalibration, with some metropolitan areas showing more pronounced price drops than previously anticipated. While a statewide slowdown is evident, experts suggest this is a market correction rather than a collapse, with a rebound anticipated by 2026.
Key Takeaways
- Several Florida housing markets are experiencing steeper price declines than Cape Coral.
- Factors like luxury market sensitivity, post-hurricane recovery, and prior rapid appreciation contribute to these localized shifts.
- Despite current cooling, a rebound is projected for 2026, driven by normalizing mortgage rates and continued migration.
Areas Experiencing Greater Market Cooling
While Cape Coral-Fort Myers MSA saw a notable 9.6% year-over-year median price drop for single-family homes in May 2025, other areas are facing even greater adjustments. The Naples-Immokalee-Marco Island MSA leads with a sharp 19.2% decrease in median sale price, alongside a 15.3% drop in closed sales. This is attributed to the sensitivity of its luxury market to economic shifts.
Punta Gorda MSA also experienced a significant 14.5% median price decrease, despite a slight increase in closed sales. This suggests a softening of perceived home values, potentially influenced by hurricane recovery dynamics and a higher proportion of lower-priced sales.
The Sebastian-Vero Beach MSA saw a 10.2% median price drop and a 6.8% decline in sales, indicating a broader cooling in this coastal region, possibly due to rising insurance costs impacting buyer enthusiasm.
Similarly, the North Port-Sarasota-Bradenton MSA experienced a 9.9% price decrease and a more substantial 4.7% drop in sales, reflecting a market that saw rapid growth and is now adjusting to higher interest rates and increased inventory.
Understanding Market Dynamics
Several factors contribute to these localized market variations. The sensitivity of luxury markets, the ongoing recovery paths from hurricanes like Ian, and the extent of prior price appreciation during the boom years all play a role. Additionally, increased inventory levels, with a statewide supply of 5.6 months for single-family homes, are putting downward pressure on prices.
A Market in Transition, Not Collapse
Despite these localized corrections, the overall sentiment is one of market balancing rather than a widespread crash. Statewide, median sale prices for single-family homes dropped by 2.7% year-over-year in May 2025, but remain significantly higher than pre-2020 levels. The condo and townhouse market has seen a more pronounced decline of 6.1%.
Experts point to normalizing mortgage rates and continued, albeit adjusted, migration trends as key drivers for an anticipated rebound in 2026. International buyer activity has also shown a resurgence, adding to market confidence. While challenges remain, particularly concerning affordability and insurance costs, the Florida housing market is viewed as resilient and poised for a sustainable recovery.
Sources
- 4 Florida Housing Markets Facing Worse Potential Crash Than Cape Coral, Norada Real Estate Investments.
- Florida Housing Market on the Verge of a Strong Rebound in 2026, Norada Real Estate Investments.
- Why is Cape Coral Housing Market in Florida Doomed to Crash in 2025?, Norada Real Estate Investments.
- This 1 part of Florida is emerging as America’s ‘epicenter of housing weakness’ — expert warns of
‘really long’ bubble deflation. Will it spread to the rest of the US?, Moneywise.