2025: Sunnier Days for Florida’s Housing Market?
Are the days of low inventory and slow sales behind us? Here’s what the experts predict for 2025.
After Hurricanes Helene and Milton passed Northeast Florida with minimal impact, Jennifer White, a Realtor® with RE/MAX Specialists PV in Ponte Vedra Beach, felt a renewed sense of optimism about the outlook for the 2025 housing market.
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“Once the dust settles after a hurricane, people come back and rebuild because of the quality of life in Florida and the lower cost of living,” White says. “People are attracted to Florida because there’s no estate tax or state income tax here, plus we have good weather and good infrastructure.”
Northeast Florida’s job market continues to grow, particularly in the health care, transportation and insurance industries, which will continue to bring in new residents, White says.
Declining mortgage rates, more inventory and greater confidence in the economy is expected to boost the Florida housing market in 2025, despite slow sales and flat prices in 2024.
“Florida in the 2020s is the California of the 1950s,” says Dr. Ken Johnson, Ph.D., a real estate economist and the Christie Kirkland Walker Chair of Real Estate at the University of Mississippi in Oxford, Mississippi. “It’s got the same level of interest as post-World War II California, with the same pattern of in-migration regardless of concern about natural disasters, such as earthquakes there and hurricanes here.”
However, home sales in Florida dipped a little below pre-pandemic levels beginning in mid-2022 when mortgage rates rose.
Challenges and opportunities in 2025
“The primary factor impacting the Florida market continues to be mortgage rates,” says Dr. Brad O’Connor, Ph.D., chief economist for Florida Realtors®. “Prices stopped rising around the same time that mortgage rates rose, which is natural, since there have been fewer buyers relative to sellers since then.”
In some markets, extensive new construction and less demand have led to increased inventory, O’Connor says. Still, inventory levels are close to 2019 levels, and there are few distressed sales since prices remain stable.
“Increased inventory is a demand-side issue with homes staying longer on the market rather than new listings,” O’Connor says. “Demand is down universally in Florida and everywhere because of affordability issues.”
Migration has slowed across the country because of affordability issues, including Florida, O’Connor says.
“The best way to get an increase in sales activity is to increase affordability, either through lower mortgage rates or lower prices,” O’Connor says. “We have a sizable number of millennials who want to buy and who will adjust to rates and prices and take on a larger mortgage to become homeowners, which will also help increase sales.”
Retirees with paid-off homes or plenty of equity are therefore impacted less by mortgage rates and may be an easier market for agents to tap, O’Connor says.
“Florida needs mortgage rates to drop below 6% to generate more sales, especially in the western part of the state,” says Logan Mohtashami, lead analyst at HousingWire. “Miami is somewhat insulated from rates because there are a lot of cash buyers there, but everywhere else needs low rates.”
Mohtashami says for rates to decline below 6% requires a weaker labor market or for the Fed to recognize the housing affordability crisis.
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“Still, home sales won’t crash because we’ve got millennials, Gen Z, Gen X and baby boomers ready to go and move as soon as affordability gets a little better,” he says. “Whenever rates get close to 6%, we see a surge in mortgage purchase applications.”
Some of the factors that slowed sales in 2024 will disappear in 2025, White says.
“Buyers were skittish when mortgage rates were near 8%, plus the unusual election cycle, the talk of a possible recession, and then the back-to-back hurricanes kept people on the sidelines,” White says.
Hurricane impacts diminish with time
Johnson, formerly with Florida Atlantic University, says that 350 identifiable tropical storms and hurricanes have struck the state over the last 125 years and not one resulted in a long-term negative impact on the real estate market.
“Now the momentum for Florida is too big, with the entire U.S. economy moving south,” Johnson says. “The lack of income taxes here is just the cherry on the cake.”
In the short term, as displaced residents need homes and properties need to be rebuilt, rents tend to rise, Johnson says. After Hurricane Ian, rents jumped 14% to 15% from Fort Myers through Tampa and into Orlando, Johnson says, but they returned to normal long before the 2024 hurricane season began. ‘
However, the extensive damage of hurricanes Helene and Milton, along with the extreme difficulty in obtaining or affording homeowner’s insurance, could keep a small group of people from returning to pockets on Florida’s west coast, Mohtashami says. In areas with cash buyers and luxury homes, homeowners often self-insure, he says.
“High insurance rates will keep certain buyers out of Florida, but the strong job market and wage increases in the eastern part of the state are good enough to overcome the insurance issue for most people,” he says.
Overcoming insurance woes
The exodus of many insurance companies and rising homeowner’s insurance premiums from the state contribute to affordability issues in Florida, Johnson says, with hurricanes Helene and Milton likely to exacerbate the problem. More than 1.3 million Florida homeowners relied on the state’s insurance of last resort Citizens Property Insurance Corp. as of September 2024, but the nonprofit faces financial challenges because of its rapid increase in customers.
However, Johnson says, “Buyers don’t pay that much attention to their insurance premiums. Over the last few years, with incomes going up, and especially when mortgage rates were low, that offset the monthly cost of their insurance premiums.”
In-migration after Hurricane Ian was the second highest in the country, Johnson points out, up 1.6% in 2023 over 2022 with the addition of 360,000 new residents, which took place despite high homeowner’s insurance costs.
But White says insurance issues killed several deals in 2024, especially for coastal and oceanfront properties where the buyers couldn’t get insurance.
“Sellers need to know that their buyers won’t be able to get insurance unless the roof is less than 15 years old, so they may as well replace it or be prepared to drop their price,” she says.
White recommends flood insurance for all buyers, even those not in a flood zone, but she says the premiums that were once $400 to $500 are now $800 to $900.
As Florida’s housing market enters 2025, strong demand, rising inventory and a competitive job market will continue to attract new residents despite lingering challenges with affordability and insurance.
Industry experts like O’Connor and White see optimism on the horizon, with factors like declining mortgage rates and a resilient economy poised to support renewed market activity. While high insurance costs and economic uncertainty create barriers for some, the enduring appeal of Florida—its lifestyle, climate and tax advantages—remains a powerful draw.
Commercial market resilience
Florida’s commercial and residential markets remain resilient to the headwinds of hurricanes and remote work, says Jennifer Forbes, a broker with Commercial TeamMates, Inc. in Coral Gables.
“We’re seeing a strong post-pandemic recovery in the multifamily, retail, industrial and logistics markets,” Forbes says. “Office vacancy rates are in the 18% to 20% range in much of the state, but they’re much lower in South Florida, especially Miami, which continues to see an influx of tech and financial services companies, as well as other corporations migrating there.”
As with other commercial markets around the country, Forbes says there’s a “flight to quality” with new and retrofitted Class A buildings with high tech, green areas and collaborative space the most likely to attract tenants.
Investors in commercial real estate are particularly attracted by mixed-used development and the health care sector, Forbes says, since baby boomers continue to move to Florida and will need housing and health care.
“Retail is the darling of the asset classes right now, because in 2024 just one shopping center was built in Southeast Florida, and normally there are 5 to 10 new centers built every year,” Forbes says. “Big developers for industrial and multifamily projects are moving ahead with projects for 2025, too.”
Forbes anticipates a strong year for both commercial and residential real estate in South Florida.
Northern Florida continues to experience robust growth with the Mayo Clinic and other health care facilities, such as memory care and assisted living expanding, along with the transportation industry led by CSX headquarters, says Jennifer White.
“There’s lots of land available in the area around Jacksonville, so we’re seeing more companies come in and build their headquarters here,” White says. “The port was deepened in 2022 to allow more global commercial shipping here, which adds to the local economy.”
Regional market trends
- Panhandle: Dr. Ken Johnson says the population growth in this region was up 10% to 12% over the past decade. Tallahassee sales volume dipped 4% during the first nine months of 2024, but prices rose 2%.
- Northeast/Jacksonville: Northeast Florida is experiencing job growth and plenty of new construction. Active adult communities have been particularly popular with most of them sold out into 2025, Jennifer White says. Home prices rose 3.9% during the first nine months of 2024 compared to 2023.
- Orlando: Sales volume was down 2.5% during the first three quarters of 2024, but prices rose 3%. Job growth continues to be strong in the area, Logan Mohtashami says.
- Tampa: Home prices were up 1.9% year-over-year during the first quarter of 2024, and the city continues to experience a solid labor market, Mohtashami says.
- Southwest: Over the past decade, the population in this part of Florida rose 20%, Johnson says. While Fort Myers saw a dip of 4.7% in the median sales price during the first three quarters of 2024 compared to 2023, in Naples the median sales price rose 5.6%.
- Miami/South Florida: Inventory is still low in Miami and much of South Florida, Dr. Brad O'Connor says. The median sales price rose 7.6% year-to-date as of Sept. 30, 2024, compared to that same period in 2023. Job growth and migration are both strong, too, Mohtashami says.