Florida housing market crumbles: Homeowners struggle to sell amid rising insurance costs, storm fears

Anthony Holmes thought he hit the jackpot when he joined the wave of Americans fleeing to Florida during the pandemic.

Like thousands of others, he left Virginia in 2021 for a new life in the Sunshine State, buying a five-bedroom house in a Tampa gated community.

He dropped $550,000 on the property and invested another $50,000 in solar panels and interior improvements, confident that Florida’s booming real estate market would continue to grow. Now, he can’t even give the house away, according to the Wall Street Journal.

“I can’t unload the thing,” Holmes told him. “In eight months, I had zero offers. No one showed up at the open houses either. No one.”

After listing the home in February, Holmes was confident he would have a buyer in no time. But despite dropping the price five times, from $620,000 to $583,900, he still hasn’t had a single offer.

Florida’s once-hot housing market has turned cold, leaving Holmes and many other homeowners stranded. Across the state, home sales have slowed to a crawl. Inventory is up more than 50% in major cities like Tampa, Orlando and along the Space Coast, while demand has fallen by at least 10%, according to real estate data firm Parcl Labs.

More than half of Tampa’s homes on the market have seen price cuts, making it one of the hardest-hit metropolitan areas in the country.

A deadly mix of high mortgage rates, rising insurance premiums and, increasingly, hurricanes are the latest culprits. After Hurricane Helene devastated parts of Florida’s west coast just two weeks ago, another monster storm — Hurricane Milton — is roaring into the Gulf of Mexico, set to make landfall this Wednesday.

Governor of Florida. Ron DeSantis has already declared a state of emergency and warned that Milton could bring significant damage. DeSantis emphasized the amount of flooding that will occur, urging residents to prepare for evacuations.

These storms have become the last straw for many Florida homeowners who are already buckling under rising insurance premiums.

Insurance costs in Florida have risen as much as 400% in recent years, driven in part by the frequency of hurricanes. Homeowners are paying more for coverage than almost anywhere else in the country, and some, like Holmes, have been dropped entirely by their insurance providers.

Holmes, who paid $1,700 a year for his insurance, was knocked down after Hurricane Idalia swept through the area. Now he pays double that amount.

A state once flooded with eager buyers is now full of desperate sellers. Analysts say Florida is facing a potential housing correction as inventory outstrips demand, leaving prices flat or even down in some areas.

Brad O’Connor, chief economist for Florida Realtors, believes that with the glut of homes on the market, “we may see a deterioration in prices in some areas,” he told the Journal.

Even the condo market, once a cornerstone of Florida’s real estate boom, is taking a hit. After the tragic 2021 condo collapse in Surfside, which killed 98 people, Florida passed new laws requiring apartment buildings to undergo expensive structural assessments and repairs.

In older buildings, these costs are being passed on to owners in the form of massive special assessments — sometimes running into the hundreds of thousands of dollars per unit. For those with apartments in need of major repairs, the market has already deteriorated.

Some older units are selling for nearly 20% less than last year, with mortgage lenders reluctant to finance sales for high-risk properties. For example, in North Miami’s Cricket Club condominium, two-bedroom units that once sold for $450,000 or more are now going for as little as $200,000 after residents were hit with an assessment of $134,000 per cover necessary repairs.

Institutional investors, who have been major players in Florida’s real estate market for years, are also starting to pull back.

In Tampa, Orlando and Jacksonville, investors have begun listing homes they once bought wholesale, hoping to cash in before the market deteriorates further. Over the past 60 days, nearly one in 20 home listings in these markets have come from institutional investors.

“When institutional investors exit a market, it can be very fast,” said Jason Lewris, co-founder of Parcl Labs. “If they start raising provisions, that could have a cascading effect on house prices.”

At the moment, Miami is one of the few bright spots in the state. While inventory has increased, an influx of wealthy residents, cash buyers and job growth have helped keep the market stable. But for homeowners further north, like Holmes, the outlook is not so rosy.

With another hurricane on the way and no buyers in sight, Holmes just hopes to hang on.

“I have no doubt that a combination of high prices, high mortgage rates and high insurance has just completely crashed the market,” he said.