Florida is notorious for how volatile its housing market can be. During the housing bubble and subsequent crash of the late 2000s, Florida was one of the hardest hit states. Many Florida housing markets are notable for their heavy ownership by foreign investors. What’s more, Florida has a high rate of wealth inequality, creating a patchwork of high-income, expensive cities, alongside low-income, cheap housing markets.
Many have been wondering when will the housing market crash in Florida. Predicting a crash is obviously fraught with problems, as is any prediction of the future. However, if we look at factors like year-over-year changes in home prices, the number of days on market a home for sale spends, the percentage of homes for sale that have had their prices dropped, the sales-to-list price ratio, available inventory, and number of home sales, we can get a clearer picture of what’s going on in the Florida housing market.
Using data from RedfinRDFN covering all the above-mentioned factors, we analyzed which cities in Florida have been experiencing the greatest disruption in their housing markets. This may shine a bit of light on when will the housing market crash in Florida, but again, it’s merely a picture of what’s currently going on — not an oracular prediction of the future.
Looking at the data from Redfin, the Florida housing market as a whole is showing mixed signals. Like many other housing markets during the pandemic, home prices in Florida began a substantial rise in 2021. In May 2021, the median sale price in Florida overall ($332,300) was up 23.5% from May 2020 ($269,100). Looking at the five-year period from September 2017 to September 2022, the median sale price in Florida peaked in May 2022 at $410,900; as of September 2022, the median sale price is down to $392,500.
Recent months have seen month-on-month declines in the Florida median sale price. From June 2022 to July 2022, Florida’s median sale price fell by 2.7%, from $410,400 to $399,200. And then from July 2022 to August 2022, it fell by 1%, and from August 2022 to September 2022 by 0.7%. However, it must be noted that, throughout the entire period September 2017 to September 2022, Florida’s median sale price exceeded $300,000 for the first time from November 2020 ($298,300) to December 2020 ($303,500). Thus, though home prices in Florida on the state-level have declined in recent months, they are still historically much higher than in the past.
Other factors, however, seem to point to a continued slowdown in the Florida housing market. For example, the percentage of active listings that have had their prices dropped has increased from 18.2% in September 2021 to 31.9% in September 2022, which is nearly a third of all active listings in the state. Available for-sale inventory has increased year-over-year by 28.1%, from 73,875 homes in September 2021 to 94,607 homes in September 2022. And the number of home sales has notably declined, by 29.9%, from 40,935 home sales in September 2021 to 28,695 home sales in September 2022.
Florida Housing Market on the City-Level
Looking at individual Florida city housing markets, many have experienced severe fluctuations. Focusing on cities with populations of at least 10,000, for example, the city of Lockhart in the Orlando metro area, has seen its median sale price drop by 50.7%: From $240,000 in September 2021 to $118,334 in September 2022. Immokalee, which has a population of just under 25,000, has seen its median sale price decline by one-third: From $227,900 in September 2021 to $152,000 in September 2022. Meanwhile, the tiny town of Fisher Island, always one of the most expensive housing markets in Florida, has witnessed a year-over-year decline in home prices of 47.8%: From a $7.5 million median sale price in September 2021, down to a little over $3.9 million in September 2022.
Florida’s major cities, on the other hand, have still seen year-over-year increases in home prices. Miami, for example, has seen its available inventory decline by 10.7%, from 4,903 homes for sale in September 2021 to 4,378 homes for sale in September 2022; over the same period, the Miami median sale price rose by 24.5%, from $425,600 to $530,000.
However, other major Florida cities are showing more mixed signals in terms of housing market activity. In Tampa, for example, though home prices have increased year-over-year, the number of home sales dropped by 40.7%, from 1,076 in September 2021 to 638 home sales in September 2022. Meanwhile, Tampa’s available inventory rose by 43.6%, from 1,292 homes for sale in September 2021 to 1,855 homes for sale in September 2022. Cape Coral has experienced a massive increase in its housing inventory: From 862 homes for sale in September 2021, inventory rose by 93.3%, to 1,666 homes for sale in September 2022. Port St. Lucie’s housing market saw 16% of active listings have price drops in September 2021, before more than doubling to 36% of active listings in September 2022. Inventory in Port St. Lucie saw a large increase (79.8%) over the same period, from 891 homes for sale last September to 1,602 homes for sale in September 2022. At the same time, the number of home sales dropped by one-quarter (24.9%) year-over-year.
The Bottom Line on the Florida Housing Market Crashing
Although housing data on the Florida housing market reflects a general slowdown in activity, something like a horrific crash comparable to the late-2000s housing crash seems unlikely. But what is concerning is the level of mortgage debt carried by Floridians. According to Credit Karma, Florida has an average mortgage debt of $223,804, the 19th highest out of all 50 states plus the District of Columbia. The median household income in Florida is $57,703, according to the Census Bureau’s 2020 American Community Survey 5-Year Estimates, but income inequality is on the higher side in the state. The Gini index of income inequality — in which 1 is equivalent to total inequality and 0 being total equality — for the United States is 0.4817, while the Gini index for Florida is higher at 0.4856, according to the Census Bureau. Thus, if a recession were to strike, causing a rise in unemployment, Florida’s average mortgage debt may become unsustainable for many residents and a potential worsening of income inequality.
Overall, the Florida housing market is likely to remain strong in 2023, with continued demand for homes and steady price growth. However, the market may begin to stabilize as the growth rate slows down, which may lead to more balanced conditions between buyers and sellers.
Most experts do not expect a housing market crash in 2023 since many homeowners have built up significant equity in their homes. The issue is primarily an affordability crisis. High interest rates and inflated home values have made purchasing a home challenging for first-time homebuyers.
Despite the fact that there are some troubling trends in the housing market, we're likely not going to see a crash in 2023 or 2024. While house prices are likely to drop, demand for housing caused by America's ongoing housing shortage is likely to keep prices relatively stable.
There are various reasons why people are moving to Florida. The most common ones include warm weather, affordable cost of living, and job opportunities. Additionally, many people are reevaluating their living situations and considering moving to areas with more space and outdoor activities.
The cost of house building in Florida ranges between $240,000 – $350,000, with the state average at $295,000. This figure does not include land costs, excavations, permits, and other expenses. Home building prices in Florida can reach millions depending on the build type and customizations.
While there's no consensus on what rents will do exactly in 2023 — go up a little, go down a little, or stay flat, according to three forecasts — what's clear is they are expected to return to more normal growth patterns, instead of the unsustainable, record rates seen in 2021 and 2022.
A downturn in general economic activity leads to less disposable income, job losses, and fewer job openings, which decreases the demand for housing. A recession is particularly dangerous. Demand is exhausted, bringing supply and demand into equilibrium and slowing the rapid pace of home price appreciation.
Although home prices are expected to improve in the second half of the year, the California median home price is projected to decrease by 5.6 percent to $776,600 in 2023, down from the median price of $822,300 recorded in 2022.
What happens to my mortgage if the housing market crashes? A housing market crash won't affect your existing fixed-rate mortgage. However, if the value of your home drops below your purchase price, then you'll be making payments that are greater than the worth of your property.
Yes—in two years' time. Both the housing market and millennial demand remain red hot, recent data from the Bank of America suggests. Sixty-seven percent (67%) of millennials said they are likely to purchase a property in the next two years, the 2022 Millennial Home Improvement Survey found.
A majority of Americans had been reporting it's a good time to buy a house up until 2022. Low inventory and skyrocketing home prices certainly play a part. Home prices were up 38% in April 2023 compared to the same period in 2020, according to Zillow's Home Value Index. Homes on the market are also harder to come by.
In 2025, the housing market is expected to start picking up again, with home prices rising by approximately 1% to 2% above the current inflation rate. This increase will be due to a combination of factors such as the rise in real incomes, lower mortgage rates, and increased affordability.
The Current State of The Florida Housing Market in 2022
The fact is, the demand for Florida homes remains one of the highest in the nation, (even through years like 2022) due to Florida's weather, lower income taxes, & low property taxes. This helps to explain the increase in home prices particularly in Florida.
Florida is an excellent location if you're looking for work. According to Wallethub, Florida is the 14th best state to find a job. The unemployment rate in Florida was only 2.5% in December 2022. With the national unemployment rate at 3.4%, many people move to Florida to take advantage of opportunities in their fields.
The cost of living in Florida is 1% higher than the national average. Housing is 4% higher than the national average, while utilities are 1% higher. When it comes to basic necessities such as food and clothing, groceries are around 2% lower than in the rest of the country, while clothing costs 2% lower.
More high-earners moved to Florida than to any other state between 2019 and 2020, per an analysis by SmartAsset of IRS data. It found that Florida saw a net influx of 20,263 households earning over $200,000 a year—nearly four times how many high-earners decamped to Texas, the second-most popular destination.
Overall, the average cost of homes for sale in Florida is $406,988, with an average price per square foot of around $207. Therefore, it's currently more expensive on average to buy an existing home in Florida than it is to build a house.
Overall, it's cheaper to build a home than to buy one in California, with 13 out of the 20 counties saving you money if you decide to build your house from scratch. Budget-wise, building is more favorable in Southern California whereas Central California caters best to those interested in buying.
Is it cheaper to build or buy a house? As a rule of thumb, it's cheaper to buy a house than to build one. Building a new home costs $34,000 more, on average, than purchasing an existing home. The median cost of new construction was $449,000 in May 2022.
A more conservative cohort predicts a more modest 10.3 percent growth in the same period. In addition, a mere 8 percent of poll participants expect the housing market to largely favor homebuyers in 2026.
The state where house prices are predicted to be the highest by 2030 is California, where the average home could top $1 million if prices continue to grow at their current rate. Other states expected to see their average house price rise above the $750k mark include Hawaii, Washington and Colorado.
Will house prices go down in a recession? While the cost of financing a home typically increases when interest rates are on the rise, home prices themselves may actually decline. “Usually, during a recession or periods of higher interest rates, demand slows and values of homes come down,” says Miller.
No, there is no rent increase limit in the state of Florida. That means landlords can legally charge as much for rent as tenants are willing to pay. However, just because there are no rent increase limits doesn't mean landlords can charge exorbitant rates, and tenants are expected to accept.
— The cost to rent a home in Florida continues to rise above the national average. But according to a national survey by Florida Atlantic University, there is some good news for residents. Rent hikes devastated many residents who live in Palm Beach County and the Treasure Coast about a year after the pandemic hit.
Average Housing Costs in Florida: $1,137 to $1,981 per month
No matter where you live, one of your largest ongoing expenses will be paying for housing. Florida has nearly 10 million housing units, according to the 2021 census, so there's an array of housing options throughout the state.
Homebuyer.com data analysis indicates that, for first-time home buyers, June 2023 is a good time to buy a house relative to later in the year. This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment.
Is Buying A Home During A Recession Worth It? In general, buying a home during a recession will get you a better deal. The number of foreclosures or owners who have to sell to stay afloat increases, typically leading to more homes available on the market and lower home prices.
When will the housing market crash? Actually, economists do not think it will. Housing economists point to five main reasons that the market will not crash anytime soon: low inventory, lack of new-construction housing, large amounts of new buyers, strict lending standards and a drop in foreclosures.
If you need to be occupying your home by a certain date to save on rent, it's a much better deal to close at the end of the previous month (for example, January 30) instead of the beginning of the current month (February 1).
Mortgage Bankers Association: The trade group's latest forecast has U.S. home prices, as measured by the FHFA US House Price Index, falling 0.6% in 2023 and another 1.4% dip in 2024. It then expects national home prices to rise 2.1% in 2025. (Forecast updated on April 17, 2023).
In my opinion, real estate is one intelligent option to consider in 2023, as it often has excellent returns, tax advantages and provides diversification even in the face of a challenging economic climate. Real estate also has the potential to compound your investment.
Before a recession hits, home prices are typically at an all-time high. This means that selling your home before a recession will result in a higher profit between the purchase price of the real estate and the sale price, which can increase your capital gains taxes.
Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point. Figures are the predicted quarterly average rates for the 30-year fixed-rate mortgage.
The median price for a U.S. home sold during the fourth quarter of 2008 fell to $180,100, down from $205,700 during the last quarter of 2007. Prices fell by a record 9.5% in 2008, to $197,100, compared to $217,900 in 2007. In comparison, median home prices dipped a mere 1.6% between 2006 and 2007.
Millennials, aged 27 to 42, make up the biggest group citing affordability as one of the key issues that's preventing them from buying a home. Older millennials, between 34 and 42, were the biggest group that cited the inability to afford the down payment or closing costs as a major reason why they don't own a home.
The majority of Gen Z (79.8%) believe they can only afford a home that costs less than $200,000. Only 6.9% of Gen Zers believe they can afford a home over $500,000 in their desired timeframe. These discrepancies in home price affordability truly depend on the state, city and area one may be looking to buy.
Key Takeaways. The best age to buy is when you can comfortably afford the payments, tackle any unexpected repairs, and live in the home long enough to cover the costs of buying and selling a home. Legally, you must be at least 18 in most states to buy a home.
Generally, home prices are lowest in January because demand is low, inventory is low and fewer buyers are looking for homes. While January might be the best month to get the lowest price on a home, you pick from a smaller selection of homes.
Winter is usually the cheapest time of year to purchase a home. Sellers are often motivated, which automatically translates into an advantage to you. Most people suspend their listings from around Thanksgiving to the New Year because they assume buyers are scarce.
The best time to buy a house often ends up being in the late summer or early fall. Around this time, there tends to be less competition than at the peak during the spring and summer, but still a fair number of houses on the market.
Houses will be interactive and fully wireless, allowing us to access data from any point. A drive for extensive resource efficiency could see water harvested and recycled within each home. Integrated solar panels and microgen combined with ultra-thin insulation films will allow some houses to come off the grid.
How much will property prices rise in 20 years? Based on historical national average data of 3.5% home value growth rates, property prices in the US for residential homes will almost double within 20 years! The reason prices will double at that rate is because of compounding growth.
National appreciation values average around 3.5 to 3.8 percent per year. Ownerly explains that the average home appreciation per year is based on local housing market trends as well as the economy, and this makes for a great deal of fluctuation.
Are home prices in Florida dropping or rising? Over the past few years, home prices in Florida have skyrocketed. Per Redfin data, in the middle of 2020, the median sale price was $275,600 — by April 2023, that figure had jumped to $400,800.
At the end of 2022, the Florida Business Observer reported that home sales had fallen by nearly 40% in the publication's home state. At a glance, that puts Florida on par with the rapidly cooling real estate market in the country as a whole.
Looking at the five-year period from September 2017 to September 2022, the median sale price in Florida peaked in May 2022 at $410,900; as of September 2022, the median sale price is down to $392,500.
Will home prices drop in 2023 in Orlando? Due to an increase in inventory, home prices in Orlando may slightly decrease this year. Following the basic economic principle of supply and demand, the surge in supply will translate to more bargaining power for buyers.
The U.S. News Housing Market Index predicts that the first five months of 2023 will see just under 3,265 single-family homes and just over 5,545 multifamily housing units approved for production.
Florida is one of the most expensive states for housing, and Miami is the least affordable city in the country, according to a report. High demand, short supply, increased migration trends since the pandemic and exploding mortgage rates, make for a pricey combination.
Despite what some may think, 2023 is still a good year to invest in real estate, thanks to advantages like long-term appreciation, steady rental income, and the opportunity to hedge against inflation. Mortgage rates are expected to decline, but the housing market is likely to remain competitive due to low supply.
MIAMI - Skyrocketing housing prices are touching just about all of us in one way or another. Now even higher earners are giving the housing market here a second look and deciding to rent instead. While prices appear to have peaked last summer, they still ended 2022 higher than they were at the end of 2021.
In 2022, local news was abuzz with reports that Tampa had one of the country's most overpriced real estate markets. In fact, Tampa is considered the 9th most overpriced city in the country when it comes to housing, according to Florida Atlantic University's Beracha and Johnson Housing Index.
In South Florida, where there is a scarcity of land, prices are higher. But the abundance of land in the rest of the state results in lower prices for both land and homes.
In 2022, Tampa Bay ranked in the country's top 5 places to live. The area is experiencing more people relocating to the area than it has in decades. As a result, the Tampa Bay housing market continues to experience high demand. The area remains one of the more affordable places to live.
State of play: Zillow predicts home prices will increase in the Tampa area in 2023. Other markets that saw huge increases during the pandemic are now slowing down, but not us. The typical home value in the Tampa area is still up nearly 18% year over year, compared to 11% across the country.
While there's no consensus on what rents will do exactly in 2023 — go up a little, go down a little, or stay flat, according to three forecasts — what's clear is they are expected to return to more normal growth patterns, instead of the unsustainable, record rates seen in 2021 and 2022.
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