Florida’s once-booming housing market is now facing significant concerns, with several areas flagged for a high risk of price declines. Factors such as soaring insurance costs, rising inventory, and an affordability crisis are contributing to a potential market correction, prompting experts to advise caution for buyers and sellers alike.
Florida’s Housing Market: From Boom to Brink
After years of unprecedented growth, fueled by an influx of new residents and investors, Florida’s real estate market is showing signs of a dramatic shift. The state, which saw cumulative price increases of 70% to 90% since the pandemic, is now experiencing a correction phase. This downturn is particularly pronounced in South Florida, where the number of homes for sale has quadrupled since 2022, reaching its highest level in nearly a decade.
Key Factors Driving the Downturn
- Affordability Crisis: Despite recent dips, home prices remain significantly higher than pre-pandemic levels. Combined with elevated mortgage rates, many potential buyers are priced out. The median home price in Florida is around $395,000, requiring an income of approximately $86,500 to afford.
- Skyrocketing Insurance Costs: Florida homeowners face the highest average home insurance premiums in the U.S., at about $11,000 annually—nearly four times the national average. This adds a substantial and often unpredictable burden to homeownership.
- Increased Inventory and Reduced Demand: As the market slows, homes are sitting longer, leading to a surge in available properties. This increased supply, coupled with a cooling in-migration trend and a pullback from investors, has shifted leverage from sellers to buyers.
- New Regulations and HOA Fees: Following the 2021 Surfside condo collapse, stricter building regulations have led to higher HOA fees and special assessment costs for condo owners, further deterring buyers and prompting some homeowners to sell.
Markets at High Risk of Price Decline
According to Cotality (formerly CoreLogic) data from April 2025, several Florida markets are at a "very high risk" of experiencing significant price declines. These include:
- Cape Coral, FL
- Lakeland, FL
- North Port, FL
- St. Petersburg, FL
- West Palm Beach, FL
Additionally, Winter Haven and Tampa have also been flagged for major price decline risks. These areas, which saw explosive growth, are now particularly vulnerable as the market adjusts.
Advice for Buyers and Sellers
For those navigating Florida’s volatile real estate landscape, experts offer crucial advice:
- Buyers: Exercise caution and conduct thorough due diligence. Research HOA fees, property taxes, and insurance costs upfront. Be patient, negotiate, and consider the total cost of ownership. Attorney Gideon Alper advises placing investment properties into an LLC to protect assets.
- Sellers: Be realistic about pricing. The days of rapid sales and multiple offers are largely over in high-risk areas. Price competitively based on current market conditions and be prepared for longer listing times.
While a full-blown "crash" like 2008 is not universally predicted, a significant price correction is underway, bringing prices closer to alignment with local incomes and historical trends. This period of adjustment is seen by some as a necessary and healthy recalibration for the market.
Sources
- Attorney shares must-know advice for homebuyers as Florida’s real estate crash stuns experts, San Diego Reader.
- 5 Big Florida Housing Markets Flagged for a Major Price Decline Risk, Norada Real Estate Investments.
- Southern state residents ‘desperate to escape’ but homes won’t sell as crash looms, Daily Mail.
- Florida’s Housing Market ‘On the Brink’, Newsweek.
- 2 Florida Housing Markets Flagged for a Major Price Decline Risk, Norada Real Estate Investments.