Homes are piling up on the market in Florida — there are 2 big reasons why
The rosy glow of the COVID-19 pandemic real estate market appears to be drying up in the Sunshine State of Florida.
The December 2024 Monthly Housing Report released by Realtor.com® found a flood of homes sitting on the market for longer than average.
The typical home spent 70 days on the market last December—that’s nine more days than the same time last year and eight more days than the month prior, according to the Realtor.com report.
This marks the slowest December since 2019 and the slowest month since January 2023. It’s also the ninth month in a row where homes spent more time on the market compared with the previous year.
Newly listed home inventory increased by 4.8% in the South, while the Northeast and Midwest saw inventory decreases of at least 5.6%, according to the report.
The increase in newly listed homes contributed to an overall increase in inventory on the market across the country. On a national level, there were 22% more homes available in 2024 than in 2023.
Selling Florida
According to a December 2024 report, homes in Florida have been sitting on the market longer than average. oldmn – stock.adobe.com
Realtor.com compiled the top four Florida cities with the highest inventory sitting on the market for more than 90 days:
New Smyrna Beach
Number of properties on the market: 651
Median days on the market: 95
Median list price: $499,675
Palm Coast
Number of properties on the market: 1,136
Median days on the market: 94
Median list price: $417,925
Panama City
Number of properties on the market: 825
Median days on the market: 94
Median list price: $342,102
Gainesville
Number of properties on the market: 602
Median days on the market: 91
Median list price: $305,950
Here’s why Florida is seeing especially significant market lags.
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Increases in inventory
“The housing market tends to slow seasonally in the winter, and buyers and sellers turn their attention to the season’s holidays,” says Realtor.com senior economic research analyst Hannah Jones.
However, this year marked a bit of a change.
“Warm markets, especially in Florida, saw inventory pile up and market pace slow more than was typical nationally,” Jones adds. “More generally, the South has seen inventory climb and market pace slow over the last year as buyers stick to the sidelines, thwarted by still-high home prices and mortgage rates.”
Both Florida and Texas led the way in new construction during the pandemic, attempting to satisfy increasing demand from out-of-staters flocking to their warmer shores.
Home Builders Weekly, which tracks new-construction projects in Florida, reported that in 2024, there was a 10% year-over-year increase in new-construction permits—with Northeast Florida seeing a 25% increase year over year.
Higher interest rates
With 30-year fixed rates hovering around 7%, prospective buyers have been shy about entering the market. Many have been effectively “locked in” to their current home because their interest rates are so much lower.
Around 83% of mortgages have a rate of 6% or below, according to a new Realtor.com report.
Florida’s real estate slump can be attributed to a boost in inventory and high mortgage rates. Felix Mizioznikov – stock.adobe.com
At least 21.3% of those mortgages are locked in a rate below 3%, while 33.9% have an interest rate between 3% and 4%, and 18.1% have rates between 4% and 5%.
So that means new-construction houses on the market just don’t have the pool of buyers they would have had a few years ago.
Extreme weather events
Last year, Hurricanes Milton, Helene, and Debby all made landfall on the Florida coasts, causing flooding and mass destruction and resulting in billions in property damage. Many of those worst affected didn’t have flood insurance coverage.
“Recent storms not only left behind devastation but also spooked potential buyers, delaying transactions and driving down confidence,” Tony Barrett, president of the Realtor Association of Sarasota and Manatee, told the New York Post in September.
“Adding to the chaos, Hurricane Debby drenched the coast in August, followed by the devastating arrival of Hurricanes Helene and Milton in the fall, which left destruction in their wake. As insurance prices soar and investors pull back, the once-frenzied market is slowing down.”
Texas was affected by Hurricane Beryl, extreme heat, tropical cyclones, and drought, resulting in $200 billion in damage.
All the extreme weather has had a knock-on effect on home insurance costs.
According to Bankrate, the national average annual cost of homeowners insurance (with a $300,000 coverage limit) is $2,300. Florida’s average cost is more than twice that, at $5,527.
The other states where at least 10% of homeowners pay more than $4,000 annually are Louisiana, Texas, and Colorado, according to the data from the 2023 American Community Survey.
