Florida’s red-hot housing market, which has seen prices soar since 2020, may be entering a cooler phase that could benefit potential homebuyers, according to a new analysis of real estate data.
A study by Parcl Labs that covered more than 1,000 U.S. housing markets identified 15 metropolitan areas most at risk of price corrections – 13 of which are in Florida, suggesting a shift in the state’s real estate landscape.
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The analysis found growing imbalances between supply and demand in the main Florida markets, placing the State in the high-risk category.
Pensacola (in the Florida region) leads with a 52% increase in housing supply and a 28% decrease in demand. In the southwestern portion of the state, North Harbor follows Pensacola with a 50% increase in supply and an 18% decrease in demand, while Naples saw a 44% increase in supply with a 14% decrease in demand. On the East Coast, Port St. Lucie and Palm Bay show similar trends, with supply increases of 40% and 39%, respectively, against demand decreases of 22% and 18%.
According to the report, high supply and low demand are starting to have an impact on prices. In North Port, 52% of listings have seen price reductions, while Tampa and Naples are close behind, with 49% and 46% seeing reductions.
“When inventory rises faster than demand, prices will eventually have to adjust,” said Hannah Jones, senior economic analyst at Realtor.com, in a recent report. “Increasing inventory levels are a sign that the market is beginning to balance.”
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Other markets in Florida are seeing price corrections. Lakeland, which has seen prices rise 51.36% since March 2020, has now recorded a 4.63% drop from its peak. Sebastian, up 61.43% since 2020, is now down 4.14% from its high. Gainesville and Deltona show similar patterns, with drops of 2.28% and 1.96%, respectively, from their peaks.
Parcl Labs data found that new construction had an impact. In Ocala, more than 20% of new listings are new constructions. Crestview and Pensacola had more than 12% of new construction listed, indicating an influx of new inventory that gives potential buyers more options.
The increase in supply comes as Florida faces other market pressures. Recent spikes in homeowners insurance premiums and rising property taxes have increased the cost of homeownership in the state.
While the trends may worry current homeowners, they may create opportunities for buyers who have been priced out of the competitive Florida market in recent years. The combination of increased stocks, more frequent price reductions and the start of price corrections in some areas could signal a shift towards a more balanced market.
Despite the trends, the state’s housing market remains robust overall.
According to data from Redfin, home prices in the state rose 3.1% in May compared to the previous year, with an average price of US$419,700. The number of homes sold in May decreased by 2.9% year-over-year, from 39,521 in May 2023 to 38,363 in May 2024.
Homes also stay on the market longer, with the average time to sell increasing from 42 to 55 days over the same period. The numbers suggest a gradual shift towards a more buyer-friendly market, even as prices continue to rise.
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This article Experts Say These Signs Point to Affordable Housing in Florida’s Top Markets originally appeared in Benzinga.com
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