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Florida’s Housing Market on the Brink: Cape Coral Leads High-Risk Areas

Empty Cape Coral subdivision

Florida’s housing market is showing significant signs of a downturn, with several key areas facing a high risk of price declines. After a period of unprecedented growth fueled by pandemic-era demand and low interest rates, the market is now grappling with affordability issues, rising inventory, and escalating costs, particularly in insurance.

Florida’s Housing Market: From Boom to Bust Concerns

Florida’s real estate market, once a beacon of rapid appreciation, is now experiencing a significant slowdown. Following a surge in demand driven by the COVID-19 pandemic and historically low interest rates, prices soared, making homeownership increasingly unaffordable for many. However, this rapid growth appears unsustainable, with the market now entering a correction phase.

  • Condo Market Pain: Condo sales have seen double-digit drops, with Hillsborough County down 20% and Miami-Dade County down 21% in April. High mortgage and insurance rates, coupled with rising association fees due to new reserve requirements post-Surfside collapse, are major contributing factors.
  • Single-Family Home Slowdown: The pace of existing single-family home sales has been falling since February, and median prices dropped by 4% in April, the largest year-over-year percentage decline since October 2011.
  • Affordability Crisis: Despite recent dips, prices remain significantly higher than pre-pandemic levels. Combined with higher interest rates (around 7-8%), many potential buyers are priced out. The statewide median sales price dipped to $390,000 in April 2025, falling below the national median.

High-Risk Hotspots Emerge

Several Florida markets are now flagged as having a "very high risk" of experiencing major price declines, according to Cotality data from April 2025. These areas saw explosive growth and are now particularly vulnerable.

  • Top 5 High-Risk Markets: The five markets identified with the highest risk of price decline are:
  • Cape Coral’s Steep Decline: Cape Coral, topping the risk list, has seen a year-over-year price decline of -6.5% in April 2025, with prices returning to spring 2022 levels. This area experienced rapid appreciation, making it highly susceptible to market shifts.
  • Inventory Surge: Across major Florida metros, active listings have jumped significantly year-over-year in June. For instance, Tampa-Saint Petersburg-Clearwater saw a 28% increase, Orlando-Kissimmee-Sanford a 34% increase, and Cape Coral-Fort Myers a 30% increase. This increased supply, coupled with dwindling demand, puts downward pressure on prices.
  • Longer Days on Market: Homes are sitting on the market for much longer. In Cape Coral-Fort Myers, homes spent an average of 95 days on the market in June, up from 79 days a year prior. This indicates a significant cooling of buyer urgency.

Underlying Factors Fueling the Downturn

The current market correction is driven by a confluence of factors, creating a challenging environment for sellers and a cautious one for buyers.

  • Increased Inventory: The market is seeing a rebound in inventory, meaning more homes are available for fewer buyers. This shifts leverage from sellers to buyers, often necessitating price reductions.
  • Cooling Migration and Demand: The frantic pace of in-migration to Florida has slowed. The high cost of living, including rapidly rising property taxes and skyrocketing homeowner’s insurance costs, is making some reconsider Florida as a destination.
  • Investor Pullback: Higher interest rates and the prospect of falling prices make real estate investments less attractive, reducing a key source of demand that fueled the previous boom.
  • Insurance Woes: Escalating and often prohibitive homeowner’s insurance costs are a unique and significant burden in Florida, adding substantial unpredictable expenses to homeownership.

While some real estate professionals suggest the market is undergoing a

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