Florida's Real Estate Market Begins to Stabilize After Three-Year Downturn

Written by:

Steve Marcinuk

Date:

20 Jan 2026

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Florida’s real estate market is showing early signs of stabilization after three years of declining prices, hurricane disruptions, rising insurance costs, and shifts in buyer demand. Joe Murphy, a veteran broker and team leader at Coldwell Banker The Joe Murphy Team, reports that while challenges persist, several key indicators suggest the market may be nearing the end of its downturn.

Murphy, whose team has sold over 1,400 homes in 23 years and recently achieved top production status for volume and units in one of Florida’s most prominent offices, provides a detailed view of the current landscape and where opportunities are emerging.

Market Segmentation Creates Clear Divides

Florida’s property market has split into distinct segments with different performance levels. The luxury tier, especially homes above $2 million, has become the strongest sector, while mid-range properties between $500,000 and $800,000 have seen significant drops in sales volume.

“The strongest area of the market has been buyers looking for million-dollar homes and higher,” Murphy says. “We’ve seen more of what I call the billionaires buying out the millionaires, with new record sales in the county.”

This trend reflects a shift in buyer demographics, with affluent buyers dominating high-end transactions. Cash purchases account for about half of single-family home sales and a majority of condo sales, insulating these segments from the impact of higher interest rates and tighter lending standards.

Hurricanes Reshape Buyer Preferences

The 2024 hurricane season, which brought three major storms to Florida, has changed how buyers evaluate homes. Storm resilience, flood zone status, and insurance costs now factor heavily into purchasing decisions.

“Buyers are much more aware of how homes are built to withstand storms, and flood zones are a bigger topic now,” Murphy notes. “Many are reconsidering waterfront or beachfront properties, and are more open to inland areas that are less exposed to storm risk.”

This shift has boosted demand in previously overlooked inland neighborhoods and put pressure on the traditional premium pricing for beachfront homes. Features like impact-resistant windows and backup generators, once considered upgrades, are now viewed as essential.

Insurance Market Remains a Challenge, But Shows Improvement

Insurance costs continue to affect market dynamics, but Murphy reports that conditions are improving, particularly for newer homes built to current codes. The age of a home’s roof is now one of the most critical factors in determining insurance rates.

“A home with an older roof is much more expensive to insure compared to new construction with higher building standards,” Murphy explains. This has increased demand for new homes, which now make up about 25% of his business.

While single-family homes have maintained more stable pricing, condos have been hit harder by insurance issues. In some areas, condo prices have dropped by up to 50% from their pandemic peaks, reflecting higher insurance costs and stricter association rules.

Remote Work Migration Slows

A notable change in the market has been the decline in remote-work-driven relocations to Florida. The influx of out-of-state professionals moving for lifestyle reasons while keeping remote jobs has slowed sharply.

“The work-at-home movement is pretty much over,” Murphy says. “There are far fewer people moving to Florida because of remote work opportunities.”

This shift has particularly affected the short-term vacation rental sector. Rental rates have fallen due to increased supply, and many properties that previously generated strong returns now struggle to cover financing costs. Cash buyers are less affected, but investor demand for short-term rentals has cooled.

Inventory Increases but Remains Below Historic Highs

Florida’s housing inventory has increased to about four months’ supply, up from the extremely tight conditions of 2021, when supply dipped below two months. However, this is still well below the levels seen during the 2008–2009 recession, when inventory routinely exceeded a year’s supply.

“Although the market is definitely softer and home prices have dropped, we’re nowhere near the conditions from the last real estate recession,” Murphy observes.

Average days on market have increased to about 100 days for the general market. Murphy’s own listings sell faster, averaging 64 days, which he attributes to accurate pricing and effective marketing.

Investor Opportunities in Overlooked Properties

Murphy sees significant opportunities for investors willing to buy homes that retail buyers are avoiding. The current preference among buyers for move-in-ready properties has created a price gap that investors can exploit by purchasing and renovating older homes.

“The best opportunities are in homes being overlooked by retail buyers,” Murphy says. “If you have vision and are willing to do some work, there’s real potential for increased equity.”

He points to examples where new construction is selling for $800–$900 per square foot, while comparable 20-year-old homes requiring updates are available for half that price. This spread offers substantial value for investors able to renovate and modernize properties.

Policy Changes Could Affect Market Dynamics

Looking forward, Murphy highlights potential policy changes that could further influence the market. Governor Ron DeSantis has proposed homestead property tax cuts that, if implemented, could eliminate property taxes for primary residences. Such a move would be unprecedented in the U.S. and could stimulate additional demand.

“If they eliminated property taxes for homesteaded properties, that would be a first in the nation,” Murphy says. “No homeowner likes paying property taxes, and significant relief would be a win for the housing market.”

While these proposals are not yet law, they could alter the cost structure for Florida homeowners and influence both buying and selling decisions.

Market Outlook for 2026: Signs of Stabilization

Murphy believes the Florida market is nearing the end of its three-year downturn. He expects prices to stabilize and sales volume to increase, especially for properties appealing to retirees and second-home buyers.

“We’ve been in a down market for three years. I think we’re at the tail end of falling price points, and we’re going to see an increase in volume,” Murphy predicts.

However, the most significant factor that could accelerate a broader recovery is a decline in mortgage rates. If rates fall to 5%, Murphy expects a surge in listings and sales as homeowners with low-rate mortgages feel more comfortable making a move.

“Many people are trapped by their 3% mortgages and don’t want to trade up to 6%,” he explains. “If rates fall, we’ll see a release of pent-up demand.”

Strategic Positioning for Recovery

Murphy advises real estate professionals and investors to focus on properties with broad appeal, especially those in lifestyle communities and areas favored by retirees and second-home buyers. These segments have shown greater resilience and are likely to lead the recovery.

Improving insurance availability, the possibility of property tax relief, and the return of seasonal buying patterns all suggest that Florida’s real estate market is positioned for renewed growth. However, success will depend on understanding buyers’ new priorities, including storm resilience, insurance costs, and long-term affordability.

As Murphy puts it, “We have more sunny days than cloudy days here in Florida. People come here to live their retirement dreams. My advice is, don’t wait – if you want to live here, start living your dreams now.”