As the Florida real estate market moves into the final months of 2024, several key indicators point towards a shifting landscape. Rising mortgage rates, increasing inventory, insurance challenges, and changing investor dynamics are all crucial in shaping the market. Based on recent data trends, here are the key predictions for the Florida real estate market for the rest of 2024.
Declining Closed Sales and Growing Inventory
One of the notable trends throughout 2024 has been the continued decline in closed sales for single-family homes across Florida. In September 2024, closed sales were reported at 18,721, a 12.3% decrease compared to the 21,335 sales in September 2023. This pattern of declining sales highlights weakening buyer demand, driven primarily by high mortgage rates and growing financial burdens related to homeowners’ insurance costs.
In parallel, inventory levels have been rising steadily. The total active inventory for single-family homes has increased by 39.6% year-over-year, reaching 95,943 homes in September 2024. This rise in inventory is pushing the months supply of inventory to 4.6, up 43.8% compared to the same period last year. This trend points toward a more balanced market, or potentially even a buyer’s market, where buyers gain more negotiation leverage.
Price Stagnation and Seller Adjustments
Despite growing inventory and declining sales, the median sale price for single-family homes in Florida has remained relatively flat. As of September 2024, the median sale price was $410,000—a modest 0.2% increase from the previous year. The average sale price also decreased slightly by 0.6%, standing at $569,096. This price stagnation reflects a cooling market where sellers find it more difficult to command premium prices due to reduced buyer urgency.
The median percent of original list price received has also slightly dropped from 97.4% in September 2023 to 95.9% in September 2024. Sellers are becoming more open to price negotiations, which will likely continue through the rest of 2024 as competition between sellers grows and buyers have more options.
The Insurance Crisis and Its Impact on Buyer Behavior
Florida’s homeowners' insurance crisis is significantly shaping the real estate market. Rising insurance premiums—resulting from increased claims related to recent hurricanes and a reduced number of insurance providers—are impacting both current homeowners and potential buyers. Many homeowners are finding it increasingly difficult to maintain adequate insurance coverage, which adds to the number of listings as some decide to sell due to rising costs.
This insurance burden also deters buyers, especially in coastal or high-risk zones. Potential buyers are finding that insurance costs significantly increase the overall cost of homeownership, making properties in Florida less attractive compared to other regions. As we move into the final months of 2024, expect insurance costs to remain a critical factor limiting buyer activity and contributing to rising inventory levels.
Investor Activity and Market Dynamics
Investor interest in the Florida real estate market has been waning throughout 2024. Cash sales, often a proxy for investor activity, have dropped by 20.8% year-over-year. Many investors are reconsidering their positions due to rising mortgage rates and escalating insurance premiums, which reduce profitability, particularly for rental properties.
Markets such as Miami, Tampa, and Orlando, heavily driven by investor activity in recent years, are starting to cool as investors pull back. This shift contributes to increased inventory and could put downward pressure on prices, especially in markets with a high concentration of investor-owned properties. For the remainder of 2024, expect more investor-owned properties to enter the market as investors look to divest in light of increasing costs and lower margins.
Climate Risks and Shifting Demand
The impact of climate risk increasingly influences buyer preferences and property values in Florida. The 2024 hurricanes have accelerated migration from high-risk coastal areas to inland regions perceived as safer from storm damage. High insurance costs and the heightened risk of storm damage have led some buyers to avoid coastal properties altogether.
As a result, inland areas considered less vulnerable are seeing increased interest, while some coastal markets—particularly those identified as high-risk, such as Palm Bay-Melbourne-Titusville and Lakeland-Winter Haven—are experiencing softening demand. This shift in buyer preferences will likely continue for the rest of 2024, contributing to localized price corrections in high-risk regions.
Critical Predictions for the Remainder of 2024
Buyer’s Market Conditions: Rising inventory levels and declining buyer demand are expected to lead to more favorable conditions for buyers. Months supply of inventory is on the rise, providing buyers with more choices and reducing the competitive pressure that characterized the market in recent years.
Price Adjustments: While median sale prices have remained relatively flat, localized price declines are likely, especially in areas facing high insurance costs or declining investor interest. Sellers who need to sell quickly will be more inclined to lower prices or offer incentives to attract buyers.
Extended Time on Market: The median time to contract for single-family homes increased to 43 days in September 2024, compared to 28 days in September 2023. This trend of extended time on the market is expected to continue as buyers take longer to make decisions amidst rising inventory and declining urgency.
Correcting Common Misconceptions About Market Stability
There is a common assumption that the Florida housing market is expected to be stable throughout 2024, with some sources predicting increases in home prices. While specific segments, such as the luxury real estate market, may still see strong demand due to interest from international buyers, the overall market dynamics tell a different story.
The notion that home prices will increase significantly across the board does not fully account for the impact of rising mortgage rates, the ongoing insurance crisis, and investor pullback—all contributing to a cooling market. While some experts have forecast a 2.6% increase in existing home prices across the U.S. and a 6.9% increase in Florida, these predictions may not materialize uniformly across all segments. The single-family home market, for instance, is seeing signs of becoming more balanced rather than remaining an outright seller's market as inventory levels rise and buyer urgency declines.
Moreover, the condominium and townhome market is seeing a greater balance in supply and demand, with more than six months of inventory available—indicating a shift away from the highly competitive market seen in previous years. While some areas may retain strong pricing due to demand from affluent buyers, it is clear that much of the Florida market is undergoing a recalibration as broader economic pressures take hold.
Conclusion: A Cooling Market with Buyer Opportunities
The Florida real estate market is showing clear signs of cooling as we head into the final months of 2024. Rising inventory, stagnant prices, declining investor activity, and the growing insurance crisis contribute to a shift toward a more balanced or even buyer-friendly market. This presents an opportunity for buyers to negotiate better deals and benefit from increased inventory, while sellers may need to adjust expectations and pricing to attract interest.
As these trends play out through the end of 2024, the Florida housing market is recalibrating from the rapid appreciation and intense competition seen in previous years. Market stakeholders—whether buyers, sellers, or investors—must stay informed and be prepared to adapt to these changing conditions as the market finds a new equilibrium.
References:
Housing Market Predictions For 2024: When Will Home Prices Be Affordable Again? – Forbes Advisor
2024-2029 Housing Market Predictions | U.S. News Housing Market Index | U.S. News
US house prices are forecast to rise more than 4% next year | Goldman Sachs
Will mortgage rates come down? Florida’s real estate market outlook for 2024 – NBC 6 South Florida