Housing Market in Florida is Surging But There Might Be Trouble

Florida’s housing inventory levels have experienced the most significant increase nationwide on a year-over-year basis, soaring by 34%.

However, the bulk of this surge is primarily concentrated in regions of Southwest Florida, particularly in markets like Cape Coral and Fort Myers, which bore the brunt of Hurricane Ian’s impact in September 2022.

The aftermath of Hurricane Ian left behind a trail of thousands of damaged homes, fueling a surge in available housing inventory as renovations became imperative.

According to the National Oceanic and Atmospheric Administration (NOAA), Hurricane Ian caused an estimated $112.9 billion worth of total damage, ranking it as the third-costliest U.S. hurricane on record.

South Beach, Miami Beach. Florida.

The hurricane’s aftermath also coincided with a surge in home insurance costs. This combination of increased housing supply due to the influx of damaged homes, coupled with strained demand arising from soaring home prices, spiked mortgage rates, higher insurance premiums, and raised HOA fees, has contributed to a softening market across much of Southwest Florida.

Indeed, the five Florida housing markets witnessing the most significant surge in active listings between January 2023 and January 2024 were all impacted, to varying extents, by Hurricane Ian:

  • Punta Gorda, FL: +149%
  •  Cape Coral-Fort Myers, FL: +103%
  •  Arcadia, FL: +98%
  •  North Port-Sarasota-Bradenton, FL: +81%
  •  Naples-Marco Island, FL: +62%

As of March 20, there were over 1,000 homes listed for sale in Florida on Realtor.com with the terms “damaged” or “damaged” in their description. The majority of these damaged homes for sale are concentrated in the very parts of Southwest Florida, where inventory has surged over the past year.

In Cape Coral, some homes for sale include “damage” in their description to clarify to potential buyers that there is no flood or wind damage from Hurricane Ian.

However, many homes in Cape Coral do indeed have property damage from the hurricane, evident in listings such as a three-bedroom foreclosure property requiring a new roof due to damage from Hurricane Ian.

Despite the surge in inventory, sharp home price corrections across Florida have not been apparent.

Despite the surge in inventory, sharp home price corrections across Florida have not been apparent, according to the Zillow Home Value Index.

However, softening and mild declines in home prices are observed in Southwest Florida markets, particularly around Cape Coral, where inventory has spiked to or near pre-pandemic 2019 levels.

If inventory continues to rise, it’s plausible that more parts of Southwest Florida may experience home price declines.

As housing affordability remains a concern and active listings continue to increase in certain areas of Southwest Florida, further softening of prices could ensue, potentially shifting the market dynamics from greed to fear, according to industry experts like Tim McLean, a seasoned lender in Naples.

Michael Manua
Michael Manua
Michael, a seasoned market news expert with 29 years of experience, offers unparalleled insights into financial markets. At 61, he has a track record of providing accurate, impactful analyses, making him a trusted voice in financial journalism.
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