Florida's housing market is cooling down as investors stray away from the Sunshine State because of hurricanes, insurance costs and new safety measures making the state a less desirable place to live.
According to a new report by Redfin, investor purchases fell most in Fort Lauderdale with a decline of 23.8 percent year over year in the third quarter of 2024. Miami has experienced a 19.4 percent decline in the same period, whereas West Palm Beach investor purchases have dwindled by 16 percent, and Orlando has been hit by a 13.3 percent drop.
The state has also experienced an overall drop of 10.2 percent in home buying from October 2023 to October 2024. The average number of days a home remains on the market has also increased by more than a third to 67 days, up from 44 days in October last year. Despite this, the median sale price is up 1.3% year on year to $410,000.
Redfin said the drop off in purchases by investors is for the same reasons individual buyers are becoming wary of the state. Florida's housing market has been hit by numerous setbacks of late, including extreme weather, high insurance costs and a myriad of new safety regulations pushing up homeowner association costs.
Florida experienced a dramatic Atlantic hurricane season this year, with Hurricane Debby in early August and Hurricanes Helene and Milton both making landfall in the state in quick succession this fall.
Linked with the frequency of extreme weather events, Florida is also at the center of an ongoing insurance affordability crisis. According to Reuters, average homeowner premiums in Florida surged nearly 60 percent between 2019 and 2023, and 2024 hasn't provided much optimism. In recent years, insurers have either pulled out of the state or raised premiums due to the frequency of natural disasters.
As of the end of October, more than 1.3 million Florida homeowners had policies with the state's insurer of last resort, Citizens Property Insurance Corporation—a huge increase on October 2019, when there were less than 500,000 active policies.
The slowdown in purchases can also be attributed in part to new safety laws for condominium owners, who are facing increased costs due to an impending deadline that means older buildings must undergo rigorous tests to see if they are still fit to live in. The Condo Safety Act was passed in 2022 in response to the collapse of the Champlain Towers South condominium building, which killed 98 people in the Miami suburb of Surfside in 2021.
Under new laws, condos are required to undergo a milestone inspection and a structural integrity checks to evaluate whether any work is necessary to ensure the building's safety and determine how much money will be required for current and future maintenance.
"The condo market is really struggling because of high HOA [housing association] fees and homeowner's insurance costs, and on top of that, many condo owners are seeing special assessments due to new rules implemented after the Surfside condo collapse. Some condos are sitting on the market for over a year," Lindsay Garcia, a Redfin Premier real estate agent in Fort Lauderdale, said.
Across U.S. metro areas, some have experienced a surge in investor purchases, while others are witnessing somewhat similar drops to Florida. Newark, New Jersey saw investor purchases falls 19.4 percent, while Nashville, Tennessee, saw a drop of 14.2 percent.
Elsewhere, Las Vegas investor purchases rose 27.6 percent year over year in the third quarter—the biggest increase found in the research. It is followed by Seattle, Washington where investor purchases rose 21.8 percent, and San Jose, California where they rose 19.5 percent.
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