Florida's Real Estate Reality Check: A Ground-Level View of Market Corrections and Emerging Opportunities

Written by:

Steve Marcinuk

Date:

28 Jun 2025

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The Florida real estate market has experienced significant shifts since the pandemic boom, with prices dropping steadily for two years and fundamental market dynamics creating new challenges for both buyers and sellers. For investors and industry professionals trying to navigate these changes, understanding the ground-level reality is crucial for making informed decisions.

John Collinge, Realtor at DJ & Lindsey Real Estate, who covers northeast Florida from Ormond Beach to St. Augustine, has witnessed this transformation firsthand. After building a successful career as a top producer in Alaska, Collinge relocated to Florida two years ago and experienced both the tail end of the COVID boom and the subsequent market correction.

The Post-COVID Correction Takes Hold

The speed of price appreciation during the pandemic created unsustainable market conditions that are still unwinding today. “I saw properties that were $80,000 less in June, and by the time October came around, a duplex I bought here could have been purchased three or four months earlier for $50,000 to $60,000 cheaper,” Collinge recalls of his 2021 experience.

However, the market dynamics shifted significantly once interest rates began climbing. “After interest rates went up, everything stalled in 2023,” he explains. “I don’t care what anybody says, but we were in a recession. Sales died on the vine.”

The fundamental problem became a significant disconnect between buyer and seller expectations. “The main problem is the sellers all had the idea that their property was worth a ton of money more than it was really worth,” Collinge notes. “There was a big discrepancy between what buyers thought properties were worth and what sellers wanted to let them go for, especially sellers that purchased in 2021-2022.”

This pricing gap has persisted, with prices continuing to decline. “For the past two years, prices have been steadily dropping,” according to Collinge’s observations in the northeast Florida market.

New Construction Creates Additional Pressure

One of the most significant factors affecting the resale market is the influx of new construction. “Throughout all of Florida, there’s a huge bunch of home builders building large subdivisions—thousands of houses,” Collinge explains. “They just announced 8000 more houses up in the area.”

These builders have a significant competitive advantage through their ability to offer attractive financing. “You have KB Homes and all the huge home builders which are able to offer 4.99% or 4.5% interest rates,” he says. “So you take a used home for $300,000 to $350,000 and compare it to a brand new home in that price range, people are buying new homes instead of used homes.”

This has created particular challenges in the mid-price range. “Once you get between $300,000 and $450,000, those are competing directly with the builders, and those aren’t selling very well,” Collinge observes. “The builders just have a better deal.”

Coastal Condo Crisis Deepens

The coastal condominium market represents one of the most distressed segments, with multiple factors creating a perfect storm of challenges. Hurricane damage has been a major catalyst, particularly from the storm that “grinded its way up the East Coast and destroyed, flooded out a bunch of places, destroying sea walls.”

The aftermath has been financially devastating for many condo owners. “Some condos downtown in Daytona are mired in lawsuits. The HOA fees are through the roof. Some people are just walking away,” Collinge reports. “They had assessments of like $90,000 per unit for these special assessments because of all the damage.”

Insurance costs have compounded the problem significantly. “The insurance companies are pulling out. The state had to make this huge assigned risk pool, and rates went through the roof,” he explains. The combination of high insurance costs and massive special assessments has created an untenable situation for many owners.

The financial reality is stark: “Can you imagine having a $100,000 condo and paying $900 a month for an HOA fee?” Collinge asks. “You have to rent out a lot of nights per month just to pay your HOA fees.”

Cash Investors Find Opportunities

Despite the challenges, cash investors are finding opportunities in the distressed condo market. “Investors are buying the condos, cash buyers,” Collinge notes. “I’ve seen some cash buyers buying these condos on the beach. Prices were down super low, $80,000, $90,000, $100,000 for ones that were over $200,000 in the past.”

These investors are employing specific strategies to make the numbers work. “Some of them allow Airbnb, so they can rent them out and keep them alive until things get better,” he explains. However, the margins are tight: “They’re not making money on those. They’re just kind of buying time. They’re just breaking even.”

Single-Family Market Shows Selective Strength

While the overall market remains challenging, certain segments of the single-family market are performing better. “Houses between $200,000 and $300,000, those are selling pretty good,” Collinge reports. “If you got a clean one that’s three bedroom, two bath, two car garage, you can do okay.”

The price correction has been significant even in this segment. “When I got here in 2022, a single family with a swimming pool was about $400,000. Now I saw nine of them when I did a search, and they were all under $310,000,” he notes, demonstrating the extent of the price decline.

Market Conditions Show Signs of Stabilization

After a particularly difficult 2023, market conditions are showing gradual improvement. “Last year was devastating for me personally, for a lot of people I know,” Collinge admits. “This year has not been great, but the bleeding is starting to stop.”

Several factors are contributing to increased activity. “Before the election, people went into kind of a holding pattern. They didn’t want to buy anything until they knew what was going to happen with the election,” he explains. “Finally, this spring, people started coming out of their holes.”

The current environment strongly favors buyers. “I would categorize this as a definite buyer’s market now, just because of all the home builders,” Collinge states.

Migration Patterns Continue Despite Challenges

Despite the market challenges and negative headlines, population growth continues in Florida, though at a slower pace. “There’s a lot of people that are worried, and they are selling out too. But I think it’s overblown,” Collinge observes. “I’m pretty sure we’re still gaining people in Florida. It slowed down, but it’s not stopped.”

Cash buyers from the Northeast continue to represent a significant portion of purchasers. “There’s a lot of cash buyers from New York, New Jersey, the upper East Coast. They’ll sell their place in New York and come down here and buy cash,” he notes, though this trend has also moderated from pandemic levels.

Investment Opportunities and Outlook

For investors considering the Florida market, Collinge believes current conditions present opportunities for those with the right strategy and timeline. “I personally believe prices are at their lows right now,” he states. “I think when interest rates come down and prices start increasing, you could buy a house now and be paying 6.7% interest rates, but you have a good price.”

His recommendation for investors is to act while prices remain depressed: “When the prices start increasing, even if interest rates go down below six, your price is going to go higher. So if you are planning, I would say now is probably a good time. You can refinance later and still have a good purchase price.”

Geographically, he sees particular value in certain areas: “I think there’s some great no-association homes between $200,000 and $300,000 right now. It would be a great investment. You can rent them out, and they might even have a cap rate pretty soon.”

Looking ahead, Collinge expects market conditions to improve as interest rates decline. “I think by the end of the year we’re going to be getting healthier. I think once those rates go below six, I think we’re going to be back off to the races, and prices will start rising again.”

The Florida real estate market’s current challenges reflect broader economic adjustments following an unprecedented period of growth. For investors and industry professionals, understanding these ground-level dynamics, from new construction competition to coastal insurance crises, is essential for navigating the opportunities and risks that lie ahead. While the market faces continued headwinds, signs of stabilization suggest that strategic investors may find compelling opportunities in select segments and geographies.