For years, buyers and investors have lamented the lack of U.S. housing inventory, which has kept prices artificially high despite soaring interest rates. That’s why a recent report from Redfin revealing that inventory is surging in parts of Florida’s Gulf Coast has surprised many people.
Much of Florida Has Seen an Increase in Inventory and Drop in Prices
According to the report, the Gulf Coast of Western Florida, including Cape Coral and North Port, has seen inventory rise by a staggering 50% from last year’s levels—more than any other U.S. state—offering some much-needed breathing room for buyers and investors.
Other areas in the state also saw increases: North Port-Sarasota experienced a 48% increase, while pricey West Palm Beach, often home to snowbirds from New York’s Tri-State area, also saw a 20% increase in inventory.
More listings have not, however, resulted in more sales—just the opposite seems to be happening. Redfin data shows a decrease in sales early in the year (typically when residents flock to the balmy Sunshine State) in areas such as Jacksonville, where sales dropped a massive 27%; and even Miami, where they were down almost 9%.
More recent data from March backs these numbers:
The number of homes sold in the state was down 11.3% year over year.
Days on market are up by 8.
Inventory is up a mighty 28%.
Supply is doubling from two to four months.
So what’s the deal?
Redfin cited 10 cities nationwide where sellers are most likely to drop their prices. Florida had five of them:
North Port-Sarasota
Tampa
Cape Coral
Orlando
Jacksonville
Why the Drop in Prices?
The reasons for the decline appear to be multifold.
Overpriced
“Two years ago, the North Port metro was one of the most competitive housing markets in the country because it was affordable for remote workers and there was a shortage of homes for sale, but none of those things are true today,” Eric Auciello, a local Redfin sales manager, said in a statement. “Sarasota, in particular, has been overvalued for decades, and the chickens have finally come to roost. The Tampa metro has been faring a bit better.”
Drop in remote workers
As the pandemic fades into the distance, more employers are demanding in-office appearances, at least on a hybrid basis, if not full-time. CNBC reported that eight out of 10 companies will track employee office attendance in 2024, and 95% of companies surveyed said employees who don’t comply will suffer consequences like being fired and potentially losing bonuses or salary.
With a warm climate and no state income tax, Florida was a favorite destination for remote workers during the pandemic, with a high percentage relocating there from other states. It could account for a percentage drop if they are now being recalled to the office.
High insurance costs
With Florida in the crosshairs of some of the most damaging hurricanes in recent years, resulting in rising insurance costs, as well as higher property taxes and the overall cost of living, it’s resulted in the perfect storm (pardon the pun) of unaffordability.
“The tax savings from lack of state income tax only benefits the top earners because the other cost-of-living factors are so high,” Erin Sykes, chief economist with Nest Seekers International, told Fortune about the Florida market. “Thus, most [are] motivated for other benefits—political, business-friendly—for moving to Florida at this time. It’s a buyer’s market due to low transaction volume, despite list prices holding stable. Now is the time to get a deal.”
