The Florida Residential Real Estate Market: Downturns Create Upturns

Is the Florida real estate market experiencing a downturn?

The perennial sunshine and lack of a  state income tax has traditionally drawn retirees and  residential real estate buyers to Florida.  Add to this mix, remote workers who, during the onset of the COVID-19 pandemic, were able to work from home and chose the Sunshine State to live. Simply put, the Florida residential real estate market has been one of the hottest real estate markets for the past several years—- until now.

However, the Florida residential real estate market is in a state of transformational flux. Why?  According to a recent Newsweek article, migration to Florida has dropped 80% from its pandemic peak, which, in turn, has decreased the demand for housing and yet residential pricing remains high, creating a lack of affordability for local home buyers. Further, for many homeowners, staying in their homes is less expensive than moving, causing a “lock-in effect”.  Local homebuyers now need to pay 39% of their income on mortgage and real estate taxes, which has been the highest level since the 2006-2007 housing crisis.

Other issues that affect Florida residential real estate include high insurance costs and association fees.  As we discussed in an earlier blog, new legislature was passed after the Surfside tragedy for condominiums in Florida to insure that the integrity of the buildings are safe and that reserves are funded to maintain the condo’s code compliance and structure.

Downturns Create Opportunities

While Florida residential real estate prices have already fallen 2.4%  this past year, some predict that they will decrease another 5% in the coming year. This decrease may, in turn, stimulate the Florida real estate market, creating opportunities for home buying.  Whether one is a real estate investor, or a first-time home buyer,  the fact remains this:  there are many reasons why people need or wish to move (whether they relocate for work or family) to Florida, and downturns in the residential real estate market spawn buying opportunities.

It appears that mortgage interest rates will remain steady.  After nearly two years of rates increasing, mortgage interest rates began to fall at the end of 2023 and into 2024. The typical rate of a 30-year fixed rate peaked at 7.79% in October 2023 but hit a low point of 6.08% in September 2024.  This, in turn, will affect the ability of homebuyers to enter the real estate market.

Further, housing supply has increased in Florida.  While that may affect seller pricing, it also provides more homebuyers  and investors with the opportunity to enter the market.

What does this all mean?

While residential real estate buyers review trends in the housing market, trends are just that: trends.  Your particular situation should be the guide to determine if now is the time for you to buy or sell.  There is tremendous opportunity in the Florida real estate market. However, we all must remember that we are in control of whether it is a good time to buy or sell a home in Florida and not be deterred by trends.

Should you have any questions or need assistance with a Florida real estate purchase or sale, our title company, Weston Title & Escrow, Inc. is able to help you and can be reached at 954-384-6168. Should you have any legal questions about a potential purchase or sale or another legal matter, our team at Oppenheim Law can be reached at 954-384-6114.