St. Petersburg Real Estate Faces Correction as Affordability Becomes the Central Challenge

Written by:

Steve Marcinuk

Date:

11 Dec 2025

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St. Petersburg’s real estate market is undergoing a correction as affordability issues take center stage, creating a wide gap between buyers and sellers. The city, which saw a surge of demand and price growth during the pandemic, now faces a slowdown in transaction volume and downward pressure on prices across several segments.

This shift is driven by a combination of factors affecting Florida’s Gulf Coast. Rising insurance premiums, higher mortgage rates, and increased property taxes linked to recent sales have combined to make homeownership more expensive. Local agents and industry professionals describe the current environment as a “perfect storm” that has sharply limited affordability for both new and existing residents.

From Professional Baseball to Real Estate: Joshua Neitz’s Perspective

Joshua Neitz, realtor of NextHome Gulf Coast, entered real estate after his baseball career with the Yankees organization ended in 2009. “I was a baseball player, got drafted, played in the Yankees organization in the minor leagues, got released, and then in 2009 I was like, ‘What do I do?’” Neitz recalls. “I always loved real estate.”

Getting started during the 2009 financial crisis shaped his approach. “I got into real estate at the absolute worst time,” he says. Neitz began with door-to-door prospecting and short sales before managing 50 to 75 bank-owned properties at a time in Tampa. This experience led to real estate investing, where he and a partner bought properties for $40,000 to $80,000, renovated them, and either resold or held them as rentals.

His background in sports helped him persist through setbacks. “Sports teaches you so much because you fail, especially in baseball – you fail seven out of 10 times,” Neitz explains. “When I started in the toughest market, people constantly told me no, but I just shrugged it off and said I’m one step closer to a yes.”

Investor Experience Shapes Client Advice

Neitz’s experience as an investor informs how he advises clients. “When I got into the investor side, I started digging into houses and knowing what needed to be done for renovations, how much they cost, how long they took,” he says. “That really helped me on the realtor side because now when I do negotiations with other agents, I can make sure my side wins better because I know the cost, the time, and the effort they take.”

This practical knowledge guides his listing strategies. “Before we list a house, I know maybe something needs to get done. Let’s hold off on that because we can negotiate a better deal on our side, or maybe we can even let it slide by.”

Two years ago, his wife Danielle joined the business, bringing marketing skills that have helped the team stand out. “She’s really come on strong on the marketing side. We do creative videos and push out to different channels,” Neitz notes. “Now we’re truly selling houses and working with buyers, not just listing properties.”

Sellers Resist Pricing Reality

The biggest challenge in St. Petersburg’s market is the disconnect between what sellers want and what buyers can afford. “The big, difficult thing right now is sellers and buyers are at such different ends that we can’t price houses as appropriately as we normally can,” Neitz says.

This often leads to listings priced above market value. “We’ll suggest a price, and the day we’re getting ready to list it, people say they want to try $25,000 higher. I tell them it’s not going to sell there, but they fight you. So we list it, and unfortunately, you’ll probably have a price reduction.”

Many sellers feel little pressure to move quickly. “Most sellers don’t have to sell either. If you’re locked in at an interest rate of 2.5% or 3.1%, your monthly payments are so low that people have the mentality where they say, ‘Let me try it at this number. If it sells, great. If it doesn’t, I’ll just try again in three months or six months.’”

Rising Inventory and the Condo Challenge

Inventory in St. Petersburg has reached its highest level in over a decade, fueled by several factors. “Inventory is increasing because buyers and sellers are at such different ends that we haven’t come to a good meeting spot yet,” Neitz observes.

The city’s condo market faces particular headwinds due to new regulations. “The condo community has gotten crushed. The thing that happened down in Miami with the reserves and structural engineer studies – they’re getting big assessments, and people aren’t wanting to be in there as much.”

Affordability remains the core issue across all property types. “Prices went up, interest rates went up, insurance went up, and now property taxes follow the sales price. Everything’s gone up. It’s just not affordable now,” Neitz says.

Investors Pull Back as Rental Math Weakens

Investors, who once drove much of St. Petersburg’s real estate activity, have mostly stepped back. “They’re sitting pretty tight right now. The activity is down big time,” Neitz reports. “Really, the biggest things getting done are properties that were affected by the floods and hurricanes.”

The economics of rental investments have become difficult. “The math is basically out the window because it is cheaper by far right now to rent a property than to own it,” he explains. Even with owner financing at a 6% interest rate and interest-only payments, he says, the numbers barely break even.

Luxury and New Construction Face Price Pressure

Different price segments are experiencing varying levels of pressure. “The luxury market, the higher end – I’m going to come up with a number like $800,000 to $900,000 – those have held pretty strong, but in the past couple months, those are even now starting to give way,” Neitz observes.

New construction faces unique challenges due to land costs. “Dirt alone, for the most part, you’re paying anywhere from $300,000 to $700,000 for dirt,” he notes. Major builders like Canopy are launching projects at $1.3 million to $1.4 million, targeting a luxury segment that’s now showing signs of softness.

Insurance Costs and Economic Uncertainty

Insurance premiums are a growing burden, but Neitz sees them as part of a larger affordability problem. “If your insurance is going to be an extra $100 to $200 a month, and property taxes went up another $300, now you’ve got $400 to $500 a month, plus interest rates. It’s just all these things that have merged together at perfect timing to make it unattainable for most people.”

However, there are early signs of relief. “Insurance rates have started to come down here in Florida because we have a lot of competing companies that have come in. I think I’ve heard like 13 or 15 new companies, which are driving insurance down.”

Opportunities Emerge Amid Market Dislocation

Despite challenges, Neitz sees specific opportunities for investors and buyers willing to adapt. “What people are missing is repurposing or reusing buildings. I’m actually doing one right now where I purchased a church and I’m converting that into roughly 20 rental units. I got a big structure that I couldn’t build for the purchase price.”

St. Petersburg’s approach to accessory dwelling units (ADUs) creates more options. “St. Pete’s big on ADUs because we don’t have enough housing and affordable housing. You can have your single-family home and build a rental house on the back, above a garage or whatever.”

The south side of St. Petersburg remains a value play. “You could be a mile from downtown St. Pete, which is amazing, yet it’s a quarter of the price of what you’re going to pay in other areas.”

Cautious Optimism for 2026

Neitz expects challenging conditions to persist through early 2026, with potential improvement by mid-year. “I think the rest of this year washes out, and even January and February are going to possibly trend down a bit more. But I do think as we get into spring and summer, we’re going to start to see a resurgence.”

He bases this outlook on a return to normal transaction volumes. From 2013 to 2019, the market averaged 5 million to 5.5 million transactions annually. The pandemic surge topped 6 million, but current levels have dropped to about 4 million nationally. “People made their moves during COVID because we were lax down here. They forced their move early, and now we’ve had a couple of years of normalcy.”

For buyers, the next few months offer leverage. “Right now, you have great negotiating power. You can ask for more closing costs, concessions, or roof repairs. If I were buying, I would be looking in these next three to six months because I think this is about as good as it gets.”

St. Petersburg’s market correction highlights the challenges facing high-growth areas as they adjust to post-pandemic realities. While affordability is the main constraint, the city’s limited land supply, diverse buyer pool, and strong quality of life support long-term resilience. For real estate professionals, success now depends on realistic pricing, creative solutions, and patience as the market recalibrates.