
Calling all Phoenix homeowners!
The once-booming Florida housing market, which saw a huge influx of new residents during the pandemic, is showing signs of decline. A combination of excess housing inventory, waning buyer interest, and skyrocketing insurance costs has slowed home sales in many parts of the state. Phoenix homeowners and prospective buyers should take note, as the trends unfolding in Florida offer important insights for our rapidly growing market.
Florida’s Housing Boom Slows Down.
The real estate surge in Florida, driven by people relocating from high-cost states like New York and California, has significantly cooled. Anthony Holmes, a homeowner in Tampa, is one of many sellers feeling the effects. After relocating to Florida in 2021, Holmes bought a five-bedroom house for $550,000, adding $50,000 worth of upgrades. When he had to move back to Virginia for work, he expected a quick sale. However, after listing his home for eight months and dropping the price several times, he still hasn’t received a single offer.
This situation isn’t unique. Across Florida’s major markets—Tampa, Orlando, and Jacksonville—housing inventory has surged over 50% compared to last year, while demand has fallen by more than 10%. Homes that would have been snapped up a year ago are now sitting unsold for months, with prices gradually being reduced.
Rising Insurance Costs and Extreme Weather.
On top of declining buyer interest, Florida’s real estate market is being pummeled by rising insurance premiums and the increasing frequency of hurricanes. Over the last five years, some homeowners have seen insurance rates skyrocket by up to 400%. The situation worsened after recent hurricanes, like Helene, which left billions of dollars in damage.
For prospective homeowners, these insurance hikes are proving to be a deal-breaker. Many are reconsidering Florida as a place to live, or opting for homes further inland to escape the high-risk coastal areas. Some are moving away from the Sunshine State altogether, looking for more stable real estate markets.
For Phoenix homeowners, while hurricanes aren’t an issue, the rising cost of home insurance is something to watch. With rapid growth in the Valley, higher insurance rates could impact the local market’s affordability and appeal, similar to what’s happening in Florida.
Lessons for Phoenix Homeowners: Could Our Market Face Similar Risks?
Although Florida and Phoenix differ in many ways, some of the factors contributing to Florida’s real estate slowdown could affect our market as well. Home prices in the Phoenix metro area have steadily risen, driven by an influx of new residents and high demand. But as seen in Florida, market growth can reach a tipping point. High home prices, rising mortgage rates, and surging insurance costs could eventually cool down demand in our market too.
Additionally, Florida’s growing inventory is another key trend worth watching. Phoenix has experienced low housing supply for years, but if inventory begins to rise while demand softens, we could see a similar slowdown.
Institutional Investors Pulling Back.
One of the most significant signs of Florida’s housing reversal is the retreat of institutional investors. In cities like Tampa and Orlando, large investment firms that bought up thousands of single-family homes are now starting to sell off their portfolios. These institutional investors, who once drove price increases, are pulling out of the market, selling properties to cash in on their profits.
This is an important trend for Phoenix homeowners to monitor. Large investors have also been active in our market, and if they begin selling properties here as they have in Florida, it could lead to price reductions and a broader market correction.
Condo Market Crashing in Florida – What Phoenix Condo Owners Should Know.
Florida’s condo market is experiencing a unique crisis, driven by a 2022 law aimed at improving safety after the devastating condo collapse in Surfside. Older condo buildings are facing massive assessment fees to comply with the new regulations, with some assessments totaling hundreds of thousands of dollars per unit. As a result, condo prices in older buildings have plummeted.
While Phoenix hasn’t seen such drastic legislation, the lesson here is the importance of maintaining condo properties to avoid sudden cost increases. If condos in Phoenix aren’t well-maintained, similar issues could arise, especially as the market grows and regulations change.
The Bright Spot: Miami Still Thriving.
Interestingly, Miami’s market remains resilient despite the broader slowdown in Florida. Inventory is up, but demand has stayed strong, driven by wealthy cash buyers and corporate relocations. This shows that not all areas of Florida are affected equally by the downturn—another reminder that real estate markets are highly localized.
What Phoenix Can Learn From Florida’s Housing Decline.
While Florida’s housing market struggles might seem far away, they offer a glimpse of what could happen in rapidly growing areas like Phoenix. The state’s story highlights the importance of monitoring market dynamics, such as rising insurance costs, growing inventories, and changing demand.
For homeowners in Phoenix, now is the time to be cautious. Pay attention to broader economic trends, and keep an eye on how insurance rates, interest rates, and institutional investors may shape our housing market in the years ahead. As Phoenix continues to expand, it’s worth learning from markets like Florida to ensure our city remains a great place to invest in and maintain real estate.