Recent reports have raised concerns about the future of Florida’s housing market. High home prices and elevated mortgage rates are slowing the market nationwide, and Florida is no exception. The state is experiencing a surge in housing inventory, with a 57% year-over-year increase in active listings as of March 2024, according to a ResiClub analysis of Realtor.com data. Some fear this combination of high inventory and reduced demand could signal an impending market crash.
The Current Landscape
Florida’s housing market is showing mixed signals. As of June, the median sales price hit $419,000, a modest 2.3% rise from the previous year, though slightly down from its April 2024 peak. While prices remain near historic highs, many areas, particularly Central Florida, are seeing price reductions, especially in mid-range properties priced between $500K and $650K.
Real estate agents are noticing the trend. Robert Arnold of Sand Dollar Realty Group reports seeing regular price drops, while Britt Brooks of Coldwell Banker Realty in Brandon notes that while price cuts are modest, homes that are priced well still sell quickly. Redfin’s data shows that 30.7% of Florida sellers reduced their prices in June 2024, a 4.5% increase from the previous year. Home sales fell by 14.1%, with homes taking longer to sell—an average of 57 days, compared to 41 days last year.
A Shift in Demand
Florida’s meteoric housing growth since the pandemic, fueled by an influx of residents drawn by favorable tax laws, mild winters, and a lower cost of living, is showing signs of slowing. The state’s once-unprecedented price appreciation, averaging 12% annually over the past five years, is beginning to cool as affordability challenges mount.
Rising costs, from mortgage rates to property taxes and homeowner’s insurance—exacerbated by the state’s high hurricane and flood risks—are straining buyers’ budgets. Additionally, changes in real estate commission structures, driven by a recent National Association of Realtors lawsuit settlement, are adding to buyer uncertainty.
Condo associations are also facing difficulties. Stricter inspection requirements following the Surfside condo collapse have led to costly improvements and assessments, creating additional financial pressure on condo owners. Arnold points to data showing a significant increase in available condos, particularly in Central Florida, underscoring the growing challenges in this segment of the market.
What Lies Ahead?
While there are clear signs of a slowdown, experts do not foresee a crash. Instead, they suggest the market is adjusting to more sustainable levels. Brooks believes the current changes signal a healthier market where buyers have more negotiating power. Arnold agrees, noting that any price drops are likely to be minor and short-lived.
Despite the challenges, Florida remains a desirable destination, and demand for housing persists. The market may be rebalancing, but Florida’s appeal and transitory nature ensure it will continue to attract new residents.
In summary, while Florida’s housing market faces headwinds, it is not on the brink of collapse. Instead, the state is likely entering a period of stabilization, offering opportunities for both buyers and sellers to navigate a more balanced market.
