Trends Affecting the Florida Real Estate Market 2021

Gayle Kurtzer-Meyers

Current trends affecting the Florida housing market

So far in 2021, low-interest rates, low housing inventory, and high levels of inbound migration have created a red-hot real estate market in Florida. However, some experts are predicting that the state's housing market is likely to slow down shortly.

Current trends indicate that a significant cooling of the market is already underway and that a further leveling out is likely. As a result, there are two big questions on everyone's mind. How much will the market be corrected? And How soon will it happen? Could the Florida real estate market experience a noticeable correction by fall? As a property manager, I am seeing evidence indicating this could be a distinct possibility.

Migration in and out of the State

2021's migration patterns have been different than usual for the Sunshine State. Historically, in Miami, it's typical for half the incoming migrants to be from outside the United States, and retirees have migrated to the region in droves. The migration of 2021 did bring a fresh influx of retirees to the state, but it brought no new foreigners to Miami. The most unusual thing was that more families than usual from outside the state settled in Naples, Coral Gables, Sarasota, Port St. Lucie, and Ocala.

However, the National Association of Realtors reports that construction companies are actively building sizable numbers of new homes in these areas. For example, local authorities in the Sarasota metro area have recently issued twice as many building permits for new single-family homes as they do in a typical year. With new homes becoming available to house the incoming arrivals, some pressure on the local housing market may ease.

Real estate investor Jeff Greene believes the current home-buying frenzy is peaking. He expects that many of Florida's recent transplants will return to their original home states easing the demand for homes in Florida and releasing some pressure on local housing prices.
Migration into Florida/Photo by Leah Kelley from Pexels

Rising insurance costs

The cost of property insurance has gone skyward, making the expenses of HOA fees absorbent. Unfortunately, the result is many Floridians are losing their coverage or experiencing an average of 30 % increases in premiums. These rising costs pose a threat to the boom in the housing market. As a property manager working with substantial budgets and reserve tables, I see firsthand that rising insurance has taken a significant hit on budget expenses for the upcoming year. The figures are not officially out, but homeowners are already telling me that such required increases in HOA fees will force them to walk away from their homes.
Graphing out insurance rates/Photo by fauxels from Pexels

Interest rates

The Federal Reserve has indicated that they may raise interest rates. However, any significant elevation in interest rates would make mortgage payments more expensive and would therefore be likely to put a damper on demand for homes.

Possible effects of COVID-19

COVID-19 has already affected the state's housing market, and it's uncertain to what extent the health crisis will continue to play a role in affecting housing prices and demand.

There are more than 12,000 Floridians hospitalized with COVID-19-related ailments and more than 11,000 active cases in this article. Unfortunately, at this point, it's impossible to say what the outcome of these caseloads and hospitalizations will be.

Vacation rental market outlook

Demand for Sunshine State vacation rentals bounced back in 2021 after a dramatic decline in requests in 2020. As a result, vacation rental prices have risen in Walton County, encouraging local real estate investors and property management professionals. However, as we head into fall, it's expected that we'll see a seasonal dip in demand for vacation rentals when people return to the workplace.

Current market conditions in specific regions of the state


In the recent past, due partly to inbound migration, the housing market in Jacksonville has strongly favored sellers. Researchers at the National Association of Realtors have reported that the Jacksonville area has seen one of the highest rates of inbound migration in the entire United States in early 2021.

This situation resulted in a local housing market that is currently overvalued by about 22 percent, according to researchers at Florida Atlantic University (FAU) and Florida International University (FIU).
Jacksonville, Florida/Photo by Mathew105601

Research and experience indicate a pronounced cooling in the state's housing market, but I'm not forecasting an outright crash. Instead, I believe regional property appreciation will taper off and that housing prices will level out.

Homebuyers who invest in overvalued homes are likely to be hurt by this situation. Recent buyers will have to wait an extended period before seeing a tangible return on their investment. Therefore, many experts advise Floridians to seek rental accommodations right now rather than rushing into purchases of overpriced properties.

We're already seeing evidence that the property market in Jacksonville is starting to cool slightly. In August, median Jacksonville home prices dropped about 1.6 percent month-over-month.

Tampa Bay area

Tampa Bay area real estate agents have noted that the housing market in their area is showing signs of returning to normalcy. However, they note that it currently remains a seller's market, characterized by a gradual increase in inventory and buyers' sudden reluctance to continue offering massive premiums above the seller's asking price. Timing is essential in Tampa and surrounding communities. Neither a renter nor buyer has a moment to reflect on their options. While deciding what to do, the places are sold or rented to the next prospective client.
Tampa, Florida/Photo by Eric Statzer

Cape Coral and Southwest Florida

Lee and Collier counties both include sizable numbers of vacation homes. In 2020 and early 2021, numbers of vacation home sales spiked sharply upwards. As a result, median home prices in these areas also rose to greater heights than home prices in many other areas. Analysts at the National Association of Realtors attribute the increased demand to several factors:

  • Increasing numbers of people were able to work from home.
  • More children were attending school online rather than in-person.
  • People were migrating out of more sizable urban areas; Cape Coral and nearby cities have a much lower population density than cities like Manhattan and Los Angeles, making it easier to practice social distancing.

The state's Southwestern housing market is already showing signs of a correction.

One danger sign in the commercial real estate market is that the region's office buildings are staffless. Their tenants are currently paying the rent on them, but there are signs that some might abandon their office space rentals rather than renewing their leases when the time comes. If this happens, vacancy rates will inevitably skyrocket. Commercial space will be in abundance opening up better negotiating opportunities.


Taken together, the evidence we're seeing indicates that a correction in the Florida real estate market has already begun and that the slowdown is likely to accelerate this coming fall. Thus, the consensus is that gradual tapering seems more plausible than an outright crash.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. The market fluctuates; therefore, not all information will remain the same. Consult a financial or real estate attorney before making any significant real estate decisions.

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I am a Licensed Community Association Manager for the State of Florida and a published author. My top articles are about Florida RE, property management, and the many beautiful venues and activities available in the Sunshine State. Thank you for reading my work and joining me on the journey.

Kissimmee, FL

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