Florida’s housing market is undergoing a significant shift, moving from a seller’s to a buyer’s market. This transition is marked by increasing inventory, easing prices, and a slowdown in sales across the state, though some regions like Central Florida are experiencing unique trends.
Florida’s Housing Market Cools Down
The Sunshine State’s real estate landscape is experiencing a notable slowdown in both condo and single-family home sales. This comes after a pandemic-fueled boom that saw prices skyrocket, pushing affordability out of reach for many. In April, condo sales saw a double-digit drop, a trend that has been ongoing since last summer. For instance, Hillsborough County experienced a 20% decline in condo sales, Miami-Dade County saw a 21% decrease, and Southwest Florida recorded a 15.5% drop.
Single-family home sales have also been declining since February, with median prices falling by 4% in April. While prices remain significantly higher than in 2020, this 4% year-over-year decline is the largest observed since October 2011, signaling a significant shift.
Key Factors Driving the Shift
Several factors are contributing to this market correction:
- High Mortgage and Insurance Rates: Elevated mortgage rates, hovering around 7-8%, are making homeownership less affordable. Additionally, soaring homeowners’ insurance costs, particularly in Florida, are adding a substantial burden to property owners.
- Affordability Crisis: Despite some price easing, the median home price in Florida, around $395,000, remains a significant hurdle for many potential buyers, especially when wages haven’t kept pace.
- Increasing Inventory: Florida now boasts one of the highest numbers of homes for sale in the U.S. This surge in available properties gives buyers more options and reduces the pressure to engage in bidding wars, leading to longer selling times. Florida ranks as the third slowest housing market in America, with homes taking an average of 110.56 days to sell from listing to closing.
- Post-Pandemic Normalization: The unique conditions of the pandemic, such as remote work and low interest rates, fueled an artificial boom. As life returns to normal, this artificial boost is fading, leading to a more balanced market.
Regional Variations and Risks
While the overall trend points to a cooling market, regional variations exist:
- South Florida: Miami-Dade and Broward counties have seen significant drops in condo sales (25% and 24% respectively in May). Despite this, Miami-Dade’s median condo price remained flat at $425,000, while Broward’s fell slightly to $275,000. Luxury condo sales, however, are thriving.
- Southwest Florida: This region is still recovering from Hurricane Ian and the 2021 Surfside condo collapse, with coastal condo properties facing a slow recovery due to insurance issues and association fees.
- Tampa Bay: After a pandemic-era boom driven by low interest rates, the market has slowed. While a crash isn’t predicted, buyers are more hesitant due to higher rates and increased prices.
- Northeast Florida: This market is experiencing a more modest correction, with realtors describing it as a move towards a balanced market rather than a sharp decline. Buyers and sellers are struggling to meet in the middle on pricing.
- Central Florida (Orlando Region): Uniquely, the Orlando region is seeing rising median home prices despite its highest inventory in almost 15 years. This is attributed to continued demand from those moving inland from coastal areas to avoid high insurance premiums and maintenance costs.
Markets at Risk
Some Florida markets are flagged for a higher risk of price declines:
- Winter Haven, FL: Identified as one of the top five most at-risk markets nationally for price declines, with prices struggling to maintain peak levels.
- Tampa, FL: Ranked as the fourth most at-risk market, despite a recent slight uptick in median prices. Underlying vulnerabilities include rapid inventory increases and affordability stress.
Other cooling markets include Fort Myers (-5.3%), Punta Gorda (-4.1%), and Sarasota (-3.6%).
Implications for Buyers and Sellers
- Buyers: The market shift presents opportunities with more inventory and potential for negotiation. However, caution is advised, and thorough research into local trends is crucial.
- Sellers: Realistic pricing is essential in a cooling market. Homes may take longer to sell, and competitive pricing and presentation are key.
While a 2008-style crash is not widely predicted, a significant price correction is underway in many parts of Florida, bringing the market closer to historical norms and local income levels.
Sources
- Condo sales struggle in Miami but luxury market thrives, Miami Herald.
- A look into Florida real estate market, home sales slowdown, WUSF.
- Florida Has America’s Third Slowest Housing Market, Florida Daily.
- 2 Florida Housing Markets Flagged for a Major Price Decline Risk, Norada Real Estate Investments.
- Central Florida’s largest housing inventory in almost 15 years sees rising prices, Central Florida Public Media.