Florida Housing Market 'at Risk' in 13 Different Cities
In an aerial view, single family homes are shown in a residential neighborhood on May 10, 2022 in Miami, Florida.
Thirteen out of the 15 housing markets at the highest risk of a home price correction in the coming months, according to a recent Parcl Labs study, are in Florida, where new inventory has been flooding in.
The Parcl Labs' team, which delivers real-time housing market data, analytics and research, analyzed around 1,000 U.S. housing markets to identify early signs of market stress that could lead to price drops. It found that there's "trouble" ahead for the Sunshine State, which it described as "the epicenter" of a mismatch between supply and demand.
The top five list of markets with the biggest supply and demand divergence—one of the factors considered in Parcl Labs' analysis, are in Florida—namely, Pensacola (+52 percent supply increase, -28 percent demand decrease); North Port, FL (+50 percent, -18 percent); Naples (+44 percent, -14 percent); Port St. Lucie (+40 percent, -22 percent); and Palm Bay (+39 percent, -18 percent).
Four of the top five markets expected to see the biggest price drops in the months ahead—though any decline isn't guaranteed—are also in the state. These include some of the same metropolitan areas which are seeing demand drop, such as North Port (52 percent of listings with price cuts); Tampa (49 percent); Naples (46 percent); and Palm Bay (44 percent). Myrtle Beach, South Carolina, was also in the top five with an expected 46 percent with price cuts.
Several markets in Florida have already seen dramatic price cuts since the beginning of the pandemic in 2020, which saw the U.S. housing market boom as low mortgage rates, high demand and a lack of supply led aspiring home buyers to cutthroat bidding wars.
In Florida, the widespread possibility of remote work led to an influx of people moving from out of state chasing warm weather, sunny skies and cheaper taxes. The end of the health emergency and businesses' eagerness to get their workers back in the office meant a sudden slowdown in arrivals, as well as the departure of some of those who had already migrated to the Sunshine State.
In Lakeland, according to Parcl Labs' data, prices are now -4.63 percent from their peak in 2020. They increased by 51.36 percent in 2020. In Sebastian, they're down -4.14 percent from their peak of +61.43; in Gainesville, by 2.28% from +50.21 percent. Deltona, Homosassa Springs, Tampa, Ocala, Port St. Lucie, Miami and Orlando have also seen prices cool down from their pandemic peaks.
Inventory has been growing at a faster pace in the state than in the rest of the country. Florida, together with Texas, is among the states that has been building the most new homes in the past few years, trying to fill the gap between demand and inventory which marked the pandemic. But now, as mortgage rates remain high and home insurance premiums in the Sunshine State inflate, buyers are a little more reluctant.
Newsweek contacted Parcl Labs for comment by email early on Monday.
The 15 metropolitan areas which are most likely to see home price drops, according to Parcl Labs, are:
- Crestview-Fort Walton Beach-Destin, Florida;
- Daphne-Fairhope-Foley, Alabama;
- Deltona-Daytona Beach-Ormond Beach, Florida;
- Gainesville, Florida;
- Homosassa Springs, Florida;
- Lakeland-Winter Haven, Florida;
- Miami-Fort Lauderdale-Pompano Beach, Florida;
- Myrtle Beach-Conway-North Myrtle Beach, South Carolina;
- Naples-Marco Island, Florida;
- Ocala, Florida;
- Orlando-Kissimmee-Sanford, Florida;
- Palm Bay-Melbourne-Titusville, Florida;
- Port St. Lucie, Florida;
- Sebastian-Vero Beach, Florida;
- Tampa-St. Petersburg-Clearwater, Florida.
Start your unlimited Newsweek trial