Florida Housing Market Forecast for Next 2 Years: 2025-2026

September 2024 and the third quarter showed a mix of good and bad news for Florida’s real estate scene. While inventory – the number of homes available for sale – increased compared to last year, sales actually dropped. This is a key indicator of the current Florida housing market trends: things are changing, but not necessarily in a way that everyone expects.

According to data from the Florida Realtors® Research Department, in September, sales of existing single-family homes fell by 12.3% compared to September 2023. Condo and townhouse sales were down even more, at 20.7%. That’s a pretty significant decrease.

However, the median price of single-family homes only increased slightly, by 0.2%, to $410,000. Condo and townhouse prices saw a slight dip, falling 3.4% to $314,000. This suggests that while fewer homes are selling, those that are selling are holding their value relatively well. This could be due to various factors including continued high demand and limited inventory.

The picture becomes more complex when we look at the third quarter (July-September) as a whole. While single-family home sales were down only slightly (2.6%), condo and townhouse sales showed a more substantial decrease of 12.3%. The median prices remained relatively stable, with single-family homes rising a negligible 0.2% to $414,990, and condos/townhouses down 2% to $314,000.

Hurricane Helene threw a wrench into the works, disrupting the market for a significant portion of September. Florida Realtors Chief Economist, Dr. Brad O’Connor, points out that while the hurricane did cause some issues, its impact was significantly less than initially feared, thanks to accurate forecasting and the storm’s path avoiding major population centers. This is good news, highlighting Florida’s resilience to weather events, which can significantly impact the current Florida housing market trends.

Another important factor is that September 2023 saw unusually strong sales, making the year-over-year comparisons look worse than they might otherwise be. Sales tend to slow down from August to September, but this didn’t happen last year, skewing the data.

Looking ahead, the Federal Reserve’s recent interest rate cut is a glimmer of hope. This could increase buyer demand, especially for single-family homes. In fact, new pending sales of single-family homes in September were up 1.9% year-over-year, a positive sign indicating that the current Florida housing market trends might be shifting towards more stability.

Inventory Levels Are Rising

One of the most significant shifts in the current Florida housing market trends is the increase in inventory. In September and the third quarter of 2024, Florida saw a substantial year-over-year rise in the number of homes available for purchase. This is great news for buyers, as it signifies an increase in choice and could lead to better deals.

• Single-Family Homes: A 4.6-month supply in September and the 3rd quarter – up 43.8% year-over-year.
• Condos/Townhouses: A 7.4-month supply in September and the 3rd quarter – up a whopping 80.5% year-over-year.

A higher months’ supply of inventory generally indicates a buyer’s market, suggesting potential for negotiation and less intense competition.

Florida Housing Markets on the Brink? A Closer Look at Vulnerable Areas

While the overall picture paints a story of relative stability, some Florida markets are showing worrying signs. CoreLogic has identified three major metropolitan areas as having a very high risk of home price declines:

1. Gainesville: This university town is heavily reliant on student housing. Potential shifts in remote learning, overvaluation of properties in recent years, and the possibility of reduced student enrollment are all contributing to concerns.
2. Palm Bay-Melbourne-Titusville (Space Coast): The Space Coast’s economy is linked to the aerospace and defense industries. Budget cuts, an overheated market leading to speculative buying, and vulnerabilities to climate change and increasing insurance costs are causes for concern.
3. Lakeland-Winter Haven: This area’s rapid price appreciation hasn’t kept pace with local wage growth. Dependence on tourism and service industries, which are easily impacted by economic downturns, adds to its vulnerability. Also, investors starting to unload properties are increasing inventory.

These three areas illustrate the diverse nature of the current Florida housing market trends, highlighting how conditions can vary dramatically even within the same state.

The National Context: A Bigger Picture

Understanding Florida’s housing market requires looking at the national scene. Nationally, home prices are still increasing, albeit at a slower pace. CoreLogic forecasts a modest national price increase of 2.2% from July 2024 to July 2025. This slower growth reflects the impact of high mortgage rates and affordability challenges.

The contrast between these national trends and the high-risk Florida markets underscores the unique factors at play in those specific locations. The mix of local economic conditions, demographic shifts, and climate change concerns creates a more complex situation than a simple national overview might suggest.

The Miami Anomaly

Miami is a fascinating exception to the trend. It’s showing strong price growth (9.1% year-over-year as of July 2024), demonstrating the diverse and complex nature of Florida’s real estate. Its unique economic drivers and appeal to international investors set it apart from other markets in the state.

Factors Driving Florida’s Housing Market Vulnerability

Several crucial factors are impacting the state’s housing market:

• Interest Rate Sensitivity: Florida, like other areas, is very sensitive to interest rate changes. Higher rates discourage buyers and investors.
• Climate Change Concerns: Rising sea levels, hurricanes, and increased insurance costs are impacting property values and investor confidence.
• Demographic Shifts: Changes in migration patterns can significantly affect demand in certain areas.
• Economic Diversity (or Lack Thereof): Markets depending on just a few industries are more vulnerable to economic shocks.
• Investor Activity: A high level of investor ownership can create market volatility.

What Does This Mean For You?

So what does all this mean for potential homebuyers or sellers in Florida? It’s important to focus on local market conditions rather than broad generalizations. While some areas are showing signs of vulnerability, others remain strong.

• Buyers: Increased inventory is good news, giving buyers more options and potentially stronger negotiating power. However, remember to carefully consider the risks associated with certain areas, particularly those identified by CoreLogic as high-risk. It’s crucial to get a thorough inspection and appraisal of the property.
• Sellers: While prices are relatively stable statewide, the slowdown in sales means it might take longer to sell your home. Pricing strategically is more critical than ever.

The current Florida housing market trends point towards a continued period of adjustment. While some areas face challenges, others remain resilient. Thorough research and professional advice are essential for both buyers and sellers navigating this dynamic market.