Florida’s once-booming real estate market is showing signs of strain as affordability challenges, escalating insurance premiums, and overdevelopment converge to dampen demand and pressure home values. Once a magnet for pandemic-era migration, the Sunshine State now serves as a cautionary tale for other Sun Belt markets facing similar headwinds.
Pandemic-Fueled Growth Meets Economic Reality
During the COVID-19 pandemic, Florida experienced a surge in population growth, with nearly 2.76 million people relocating to the state between 2021 and 2023. This influx, driven by remote work opportunities and the state’s favorable tax policies, propelled home prices upward. However, the rapid appreciation in property values has since collided with economic realities, leading to a slowdown in the housing market.
As of April 2025, Florida recorded 33,861 property transactions, a 7.2% year-over-year decline. Existing single-family home sales dropped 4.5%, while condominium and townhome sales fell more sharply by 14.8% . The median sale price declined to $379,860, down 2.3% from April 2024.
Affordability Challenges Intensify
The affordability crisis in Florida is multifaceted. Home insurance premiums have surged, with average annual costs reaching $5,533 for a $300,000 home, more than double the national average of $2,230 . This increase is attributed to heightened hurricane activity and rising construction costs.
Additionally, homeowners association (HOA) fees have escalated. In Tampa, for instance, HOA fees increased by 17.2% as of July 2024, primarily due to rising insurance costs and new safety regulations . Property taxes have also climbed, further straining household budgets.
Overdevelopment and Market Saturation
The construction boom that accompanied Florida’s population growth has led to an oversupply of homes in certain areas. In Ocala, the number of homes for sale has nearly quadrupled from 800 to almost 3,000 over the past three years . This excess inventory has contributed to longer listing times and downward pressure on prices.
In Tampa, home prices experienced a 1.6% month-over-month decline in January 2025, the largest drop among major U.S. metropolitan areas . Approximately 34.9% of homes in the city underwent price reductions during that month.
Climate Risks and Insurance Market Turmoil
Florida’s vulnerability to climate-related disasters, such as hurricanes and flooding, has exacerbated the housing market’s challenges. The increased frequency and severity of these events have led to higher insurance premiums and, in some cases, difficulties obtaining coverage. The state’s property insurance market has faced unprecedented challenges, with homeowners grappling with higher premiums and difficulties finding coverage .
The financial strain from rising insurance costs has prompted some residents to relocate to states with lower risks and more affordable living expenses. Cities like Cape Coral and Fort Myers have seen home values decline by 5% year-over-year, with expectations of further decreases due to excess inventory .
Implications for the Broader U.S. Housing Market
Florida’s housing market challenges may foreshadow similar issues in other Sun Belt states, such as Texas and Arizona, which have also experienced rapid growth and rising home prices. Economists warn that the combination of overdevelopment, affordability constraints, and climate risks could lead to broader market corrections.
As the housing market continues to evolve, stakeholders must navigate these complexities to ensure sustainable growth and resilience in the face of economic and environmental challenges.