Florida Housing Market Shifts as Inventory Levels Begin to Decline

After two full years of consistently rising inventory, Florida’s housing market is showing signs of a directional change. The number of homes for sale across the state has begun declining for the first time in 110 consecutive weeks.

Understanding the Current Market Shift

Florida’s housing inventory had been climbing steadily since 2022, reaching peaks of over 100,000 single-family homes and 241,000 total residential properties earlier this year. Recent data from Altos Research and Compass shows single-family home listings have fallen to 96,134, while Redfin reports total housing inventory at approximately 214,500 properties – still up 5.4% year-over-year but notably down from spring peaks.

This shift comes after Florida experienced a construction boom during the pandemic, when developers rushed to meet soaring demand created by historically low interest rates, remote work opportunities, domestic migration, and relatively affordable housing prices compared to other markets.

This shift comes after Florida experienced a construction boom during the pandemic, when developers rushed to meet soaring demand. The market conditions that fueled this demand have fundamentally changed. Mortgage rates increased significantly after the Federal Reserve’s inflation-fighting rate hikes began in 2022, with recent data showing 30-year mortgage rates at 6.3%. Meanwhile, many employers have required workers to return to offices, domestic migration has moderated, and home prices now sit approximately 30% higher than 2019 levels, according to the original reporting.

Why Inventory Is Declining Despite Lower Demand

This inventory decline differs from typical seasonal patterns, according to Mike Simonsen, founder and CEO of Altos Research. “I think it’s very notable that Florida didn’t have any seasonality whatsoever for two full years. One hundred ten weeks where inventory just climbed,” Simonsen noted. “The fact that a ‘seasonal’ decline in inventory even happened this year is a change.”

Real estate economists point to two primary factors driving this inventory reduction:

1. Sellers are withdrawing properties from the market rather than accepting lower prices
2. Fewer homeowners are listing properties in the current environment

Jake Krimmel, senior economist at Realtor.com, explains this apparent paradox: “Florida inventory is falling right now, but possibly for the ‘wrong’ reasons.” New listings have decreased year-over-year each month since May, with September showing a 7.2% reduction compared to 2023. Simultaneously, delistings in August 2024 increased 60% year-over-year.

For real estate investors and property owners in Florida, this trend suggests a market trying to find equilibrium amid challenging conditions. Our real estate tax experts regularly help clients analyze how market shifts affect property valuations and investment strategies.

Financial Implications for Florida Real Estate Stakeholders

The inventory decline may eventually help stabilize prices after months of downward pressure. Chen Zhao, head of economics research at Redfin, notes that “falling inventory should help to stabilize price growth and provide a little upward pressure on prices.”

However, Florida’s real estate market faces unique challenges beyond national affordability concerns. Rising property insurance costs have become particularly burdensome for property owners. For real estate fund managers and investors, these market conditions require careful financial planning and risk assessment. 

Market Dynamics Point to Changing Seller Behavior

The increased withdrawal of listings suggests a fundamental shift in seller psychology. “We cleared out a lot of urgent sellers. Withdrawals are high, which implies that if you don’t have to sell, you’re not,” observed Simonsen.

This behavioral change appears driven by market realities. Properties are now spending approximately two weeks longer on the market compared to September 2023, according to Realtor.com data. Pending sales, a leading indicator of market activity, have declined each month since May.

For property developers and investors holding inventory, this suggests considering alternative strategies rather than accepting significant price reductions. Options might include repositioning properties for rental income or exploring cost segregation studies to improve cash flow during holding periods.

Future Outlook for Florida’s Housing Market

Experts anticipate inventory may continue declining briefly before stabilizing. Construction pipeline reductions will naturally limit new inventory, while existing homeowners will continue selling as necessary due to life circumstances and relocation needs.

However, the U.S. Census Bureau reports that building permit issuance in Florida has decreased by approximately 15% compared to 2023, indicating less future inventory pressure from new construction.

For long-term real estate investors, these conditions may present strategic acquisition opportunities as motivated sellers adjust pricing expectations. The combination of moderating inventory, reduced competition, and potential interest rate stabilization could create favorable entry points in certain market segments.

Make Strategic Decisions in Florida’s Changing Market

This market transition requires real estate professionals to adapt their strategies. With fewer urgent sellers and longer marketing periods becoming the norm, buyers may find more room for negotiation on properly priced properties.

For sellers, realistic pricing remains essential, with market data suggesting overpriced properties risk extended marketing periods or eventual withdrawal. Investors should carefully evaluate holding costs against potential appreciation when making buy-hold-sell decisions in this environment.

Make business decisions backed by insight, not speculation. Partner with our advisors to gain practical strategies for growth in Florida’s evolving real estate market. Learn more.

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