Housing markets on Florida‘s west coast are cooling faster than anywhere else in the US, new data reveals.
New construction is soaring – bringing the number of listings up to pre-pandemic levels – which means there is less competition for each home.
On top of that, soaring insurance costs and a sharp rise in natural disasters are discouraging people from settling in the area.
A cooling housing market typically occurs when there are more sellers than buyers. Prices fall and homes sell slowly – and below the asking price – while inventory levels creep up.
The opposite happened in Florida during the pandemic when it became one of America’s hottest markets – but there now appears to be a reversal. It gives hope to those wanting to buy, but is a huge blow to those who purchased in recent years.
The housing market in North Port is cooling fastest – followed by Tampa and Cape Coral, according to the fresh analysis from Redfin.
Tampa is among the cooling house markets on Florida’s west coast
The cooling of these former red-hot markets shows the pandemic-era homebuying boom in Florida fading further into the rearview mirror, Redfin said.
There are also three other Florida metros on the list of the ten markets which cooled the quickest between April 2023 and April 2024, Redfin found. These are Orlando, Jacksonville and Lakeland.
Redfin measured year-over-year changes in home prices, price drops, inventory, sale-to-list price ratio and the share of homes that sold within two weeks.
In North Port, which is located in Sarasota County between Tampa and Fort Myers, the supply of homes for sale is up 68 percent year over year – the second-biggest increase of the metros analyzed by the real estate company.
The median price per square foot is down 1.2 percent, and 42.6 percent of sellers are dropping their asking price in the city.
A few years ago, the Sunshine State’s housing market was seen as one of the most competitive in the US. It was seen as affordable for remote workers, which lead to a shortage of homes for sale.
In Tampa, which also saw a surge of homebuyers during the pandemic, 43.1 percent of sellers are now dropping their asking prices, and the supply of homes is up 62.9 percent from April 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 dropping their price – up from 32.9 percent a year earlier.
Florida is building more new homes than any other state – aside from Texas which is also home to two of the nation’s fastest-cooling housing markets.
This building boom is coming at a time when high prices and mortgage rates are dampening buyer demand.
In Cape Coral, inventory is up 64 percent, and the median price per square foot is down 2.9 percent
Increasing natural disasters are putting people off buying in Florida (Pictured: Damage from Hurricane Ian in 2022)
Despite prices softening, buyers still face challenges in the area, said Isabel Arias-Squires, a Redfin agent in Cape Coral
An increasing intensity of natural disasters – and higher insurance premiums as a result – is also putting buyers off, according to Redfin.
In the Cape Coral metro alone, Hurricane Ian in 2022 destroyed 5,000 homes and damaged nearly 30,000 more.
Homeowners in Florida already pay the highest premiums for coverage in the US, at an average of $10,996 a year in 2023, according to separate data from Insurify.
This will increase a further 7 percent this year, according to projections from the company, hiking the typical premium in the state to a huge $11,759.
‘Despite prices softening and the influx of listings, today’s local buyers face challenges with elevated mortgage rates, special assessments and the complexities of securing affordable flood insurance,’ said Isabel Arias-Squires, a Redfin Premier agent in the Cape Coral area.
‘Inventory is back up to pre-pandemic levels along the west coast of Florida as natural disasters continue to shape the region’s housing market by leading to more supply and less demand,’ added Redfin Senior Economist Elijah de la Campa.
‘Construction is booming in the wake of recent climate disasters, and there’s less demand to buy new homes as the region braces for another intense hurricane season.’
Following Cape Coral on the list of metros with the fastest-cooling housing markets are Orlando, Florida, Denver, Colorado, Houston, Texas, Minneapolis, Minnesota, Jacksonville, Florida, Lakeland, Florida, and Dallas, Texas.
On the other hand, housing markets in western New York and the Midwest are holding up best.
Rochester, New York, is the US market which is heating up the most, according to Redfin, followed by Lake County, Illinois, and Buffalo, New York.
Read More: Housing markets in this area are cooling the fastest in the US as pandemic boom