The Best- and Worst-Case Scenarios for Florida’s Housing Market in 2025
Written by
Laura Beck
Edited by
Jenna Klaverweiden
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Florida’s housing market has always been a hot topic, but what’s in store for 2025? Let’s dive into what the experts are saying about the best- and worst-case scenarios for the Sunshine State’s real estate future.
Here are the best- and worst-case scenarios for Florida’s housing market in 2025.
Best-Case Scenario: Sunny Days Ahead
Keith McCoy, owner and founder of Midtown Homebuyers in Milton, Florida, painted an optimistic picture. “If interest rates stay low and people keep moving to Florida from other states, the housing market will stay strong and continue to grow. This could keep home values high and make it a great place to sell,” he said.
Thomas Brock, CFA, CPA, of RetireGuide echoed this sentiment, pointing to recent Federal Reserve actions as a positive sign. The Federal Reserve recently cut rates by half a percentage point to a range of 4.75% to 5.00%. “This bodes well for the Florida housing market,” Brock said. He added that if inflation continues to trend downward, we could see even more rate cuts, creating a win-win situation. “Buyers will benefit from more affordable mortgage offerings, and sellers will benefit from stronger demand,” he said.
Omer Reiner, owner of FL Cash Home Buyers, sees the recent interest rate cut as a game changer. “With the lower rates, more potential homebuyers who might have been priced out for the past couple of years will get back in the game,” he said.
Kelly Salinas, associate at Re/Max Advance Realty II, provided some hard numbers to back up the optimism. “The latest data from Freddie Mac shows that the average 30-year mortgage rate has dropped to 6.09%, its lowest level since early February 2023, down from 7.19% a year ago,” she said. Salinas predicted that this trend, combined with increased inventory, “would stabilize home prices, with modest growth between 1%-2.5%, as projected by Zillow.”
Worst-Case Scenario: Storm Clouds on the Horizon
But it’s not all sunshine and palm trees. “If interest rates go up and fewer people move to Florida, the housing market could slow down, which will lead to a drop in home prices. This would make it harder for homeowners to sell at high prices,” McCoy said.
Salinas painted a particularly gloomy picture of a worst-case scenario, pointing out several potential pitfalls.
First, there’s oversupply and excess inventory. “Expecting to have an oversupply of properties on the market available continuing with Florida’s housing construction boom at an accelerated pace, and adding the fact that every year the percentage of people moving out of the state due to the high cost of living, could lead us to an oversupply of properties and lower demand, forcing … price drops,” Salinas said.
If interest rates were to go up, that could also spell bad news. “Having an oversupply of inventory and with higher interest rates this effect will automatically reduce housing demand,” she said.
There are also considerations to be made about climate change and the insurance crisis. “Florida is highly vulnerable to climate risks, including hurricanes and rising sea levels. A series of severe hurricanes or worsening insurance crises could result in large swaths of homes becoming uninsurable or prohibitively expensive to insure,” Salinas explained.
Dutch Mendenhall, author and founder of Radd Companies, added another layer to the worst-case scenario. “Florida leads the nation in home insurance costs, where 20% of homeowners pay over $4,000 annually. Such rising costs of living, combined with the squeeze of high inflation and construction costs, may squeeze a few buyers out of the market,” he said.
What Does This Mean for Investors and Homeowners?
Given these conflicting scenarios, what should Floridians and potential investors do? Mendenhall offered some sage advice. “Affordable housing in stable markets like Jacksonville and luxury properties in Naples and Miami can be combined,” he said. “With insurance spiraling out of control, the concentration should be on those properties that are not so prone to these changes — inland rather than coastal properties with natural disaster safety features incorporated into them.”
Reiner added a word of caution for sellers. “The increase in buyers will also increase competition, and that often drives up prices or at least reduces the opportunities for negotiation we have seen in the past few months,” he said.
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