When Will The Housing Market Crash In Florida?

Real Estate

Florida is notorious for how volatile its housing market can be. During the housing bubble and subsequent crash of the late 2000s, Florida was one of the hardest hit states. Many Florida housing markets are notable for their heavy ownership by foreign investors. What’s more, Florida has a high rate of wealth inequality, creating a patchwork of high-income, expensive cities, alongside low-income, cheap housing markets.

Many have been wondering when will the housing market crash in Florida. Predicting a crash is obviously fraught with problems, as is any prediction of the future. However, if we look at factors like year-over-year changes in home prices, the number of days on market a home for sale spends, the percentage of homes for sale that have had their prices dropped, the sales-to-list price ratio, available inventory, and number of home sales, we can get a clearer picture of what’s going on in the Florida housing market.

Using data from Redfin
RDFN
covering all the above-mentioned factors, we analyzed which cities in Florida have been experiencing the greatest disruption in their housing markets. This may shine a bit of light on when will the housing market crash in Florida, but again, it’s merely a picture of what’s currently going on — not an oracular prediction of the future.

Read on to find out which housing markets in Florida are ailing and which ones are still going strong.

Florida Housing Market Overview

Looking at the data from Redfin, the Florida housing market as a whole is showing mixed signals. Like many other housing markets during the pandemic, home prices in Florida began a substantial rise in 2021. In May 2021, the median sale price in Florida overall ($332,300) was up 23.5% from May 2020 ($269,100). Looking at the five-year period from September 2017 to September 2022, the median sale price in Florida peaked in May 2022 at $410,900; as of September 2022, the median sale price is down to $392,500.

Recent months have seen month-on-month declines in the Florida median sale price. From June 2022 to July 2022, Florida’s median sale price fell by 2.7%, from $410,400 to $399,200. And then from July 2022 to August 2022, it fell by 1%, and from August 2022 to September 2022 by 0.7%. However, it must be noted that, throughout the entire period September 2017 to September 2022, Florida’s median sale price exceeded $300,000 for the first time from November 2020 ($298,300) to December 2020 ($303,500). Thus, though home prices in Florida on the state-level have declined in recent months, they are still historically much higher than in the past.

Other factors, however, seem to point to a continued slowdown in the Florida housing market. For example, the percentage of active listings that have had their prices dropped has increased from 18.2% in September 2021 to 31.9% in September 2022, which is nearly a third of all active listings in the state. Available for-sale inventory has increased year-over-year by 28.1%, from 73,875 homes in September 2021 to 94,607 homes in September 2022. And the number of home sales has notably declined, by 29.9%, from 40,935 home sales in September 2021 to 28,695 home sales in September 2022.

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Florida Housing Market on the City-Level

Looking at individual Florida city housing markets, many have experienced severe fluctuations. Focusing on cities with populations of at least 10,000, for example, the city of Lockhart in the Orlando metro area, has seen its median sale price drop by 50.7%: From $240,000 in September 2021 to $118,334 in September 2022. Immokalee, which has a population of just under 25,000, has seen its median sale price decline by one-third: From $227,900 in September 2021 to $152,000 in September 2022. Meanwhile, the tiny town of Fisher Island, always one of the most expensive housing markets in Florida, has witnessed a year-over-year decline in home prices of 47.8%: From a $7.5 million median sale price in September 2021, down to a little over $3.9 million in September 2022.

Florida’s major cities, on the other hand, have still seen year-over-year increases in home prices. Miami, for example, has seen its available inventory decline by 10.7%, from 4,903 homes for sale in September 2021 to 4,378 homes for sale in September 2022; over the same period, the Miami median sale price rose by 24.5%, from $425,600 to $530,000.

However, other major Florida cities are showing more mixed signals in terms of housing market activity. In Tampa, for example, though home prices have increased year-over-year, the number of home sales dropped by 40.7%, from 1,076 in September 2021 to 638 home sales in September 2022. Meanwhile, Tampa’s available inventory rose by 43.6%, from 1,292 homes for sale in September 2021 to 1,855 homes for sale in September 2022. Cape Coral has experienced a massive increase in its housing inventory: From 862 homes for sale in September 2021, inventory rose by 93.3%, to 1,666 homes for sale in September 2022. Port St. Lucie’s housing market saw 16% of active listings have price drops in September 2021, before more than doubling to 36% of active listings in September 2022. Inventory in Port St. Lucie saw a large increase (79.8%) over the same period, from 891 homes for sale last September to 1,602 homes for sale in September 2022. At the same time, the number of home sales dropped by one-quarter (24.9%) year-over-year.

The Bottom Line on the Florida Housing Market Crashing

Although housing data on the Florida housing market reflects a general slowdown in activity, something like a horrific crash comparable to the late-2000s housing crash seems unlikely. But what is concerning is the level of mortgage debt carried by Floridians. According to Credit Karma, Florida has an average mortgage debt of $223,804, the 19th highest out of all 50 states plus the District of Columbia. The median household income in Florida is $57,703, according to the Census Bureau’s 2020 American Community Survey 5-Year Estimates, but income inequality is on the higher side in the state. The Gini index of income inequality — in which 1 is equivalent to total inequality and 0 being total equality — for the United States is 0.4817, while the Gini index for Florida is higher at 0.4856, according to the Census Bureau. Thus, if a recession were to strike, causing a rise in unemployment, Florida’s average mortgage debt may become unsustainable for many residents and a potential worsening of income inequality.

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