Real estate markets on Florida’s west coast are cooling faster than anywhere else in the United States, new data reveals.
New construction is skyrocketing, bringing the number of listings to pre-pandemic levels, meaning there is less competition for each home.
In addition, rising insurance costs and a sharp increase in natural disasters are deterring people from settling in the area.
A cooling housing market typically occurs when there are more sellers than buyers. Prices fall and homes are selling slowly – and below asking price – while inventory levels rise.
The opposite happened in Florida during the pandemic, when it became one of the most popular markets in the United States, but now there appears to be a reversal. It gives hope to those who want to buy, but it is a hard blow to those who bought in recent years.
The housing market in North Port is cooling the fastest, followed by Tampa and Cape Coral, according to the fresh analysis from Redfin.
Tampa is among the refreshing home markets on Florida’s west coast
The cooling of these formerly red-hot markets shows Florida’s pandemic-era home buying boom fading further in the rearview mirror, Redfin said.
There are also three other Florida metro areas on the list of the top ten markets that cooled the fastest between April 2023 and April 2024, Redfin found. These are Orlando, Jacksonville and Lakeland.
Redfin measured year-over-year changes in home prices, price declines, inventory, the ratio of sales prices to list prices, and the share of homes that sold within two weeks.
In North Port, located in Sarasota County between Tampa and Fort Myers, the supply of homes for sale increased 68 percent year over year, the second largest increase of the metropolitan areas analyzed by the real estate company.
The median price per square foot is down 1.2 percent and 42.6 percent of sellers are lowering their asking price in the city.
A few years ago, the Sunshine State’s real estate market was considered one of the most competitive in the United States. It was deemed affordable for remote workers, leading to a shortage of homes for sale.
In Tampa, which also saw a surge in home buyers during the pandemic, 43.1 percent of sellers are now lowering their asking prices and housing supply has increased 62.9 percent since April of last year .
Meanwhile, in Cape Coral, inventory is up 64 percent, the median price per square foot is down 2.9 percent and 37.5 percent of sellers are lowering their prices, up from 32.9 percent from the previous year.
Florida is building more new homes than any other state aside from Texas, which is also home to two of the country’s fastest-cooling housing markets.
This construction boom comes at a time when high prices and mortgage rates are dampening buyer demand.
In Cape Coral, inventory increased 64 percent and the average price per square foot decreased 2.9 percent.
Increasing natural disasters are deterring people from shopping in Florida (pictured: damage from Hurricane Ian in 2022)
Even though prices are weakening, buyers still face challenges in the area, said Isabel Arias-Squires, a Redfin agent in Cape Coral.
According to Redfin, the increasing intensity of natural disasters, and higher insurance premiums as a result, is also discouraging buyers.
In the Cape Coral metropolitan area alone, Hurricane Ian destroyed 5,000 homes in 2022 and damaged almost 30,000 more.
Homeowners in Florida already pay the highest coverage premiums in the U.S., averaging $10,996 a year in 2023, according to separate data from Insurify.
This will increase another 7 percent this year, according to the company’s projections, raising the typical premium in the state to a whopping $11,759.
“Despite falling prices and an influx of deals, today’s local buyers face challenges with high mortgage rates, special assessments and the complexities of obtaining affordable flood insurance,” said Redfin agent Isabel Arias-Squires. Premier in the Cape Coral area.
“Inventory has returned to pre-pandemic levels along Florida’s west coast as natural disasters continue to shape the region’s real estate market by generating more supply and less demand,” added Elijah de la Campa. , senior economist at Redfin.
“Construction is booming following recent weather disasters and there is less demand to buy new homes as the region prepares for another intense hurricane season.”
Following Cape Coral on the list of metropolitan areas with the fastest cooling real estate markets are Orlando, Florida, Denver, Colorado, Houston, Texas, Minneapolis, Minnesota, Jacksonville, Florida, Lakeland, Florida, and Dallas, Texas.
On the other hand, the real estate markets of Western New York and the Midwest are holding up the best.
Rochester, New York, is the U.S. market warming the most, according to Redfin, followed by Lake County, Illinois, and Buffalo, New York.