Topline
Housing markets are cooling fastest in Florida’s Gulf Coast as demand wanes due to surging insurance costs amid frequent natural disasters, while upstate New York is heating up thanks to its affordable home prices, according to a recent Redfin analysis on the 100 most populous U.S. metro areas as of April.
Housing markets on parts of Florida’s Gulf Coast are cooling faster than anywhere else in the U.S.
Key Facts
The top four fastest cooling markets were all in Florida—North Port, Tampa, Cape Coral and Orlando—where homebuying demand and competition have dropped the most while supply continued to surge.
Housing supply in North Port and Cape Coral increased by 68% and 64% year-over-year in April, respectively, the second- and third-highest among the metros analyzed, while price per square foot has decreased in both cities—making them two of the four metros where it declined.
Florida is building the most new homes in the country—second only to Texas—to meet the pandemic-driven influx of newcomers, while a subsequent rise in insurance costs following a string of natural disasters have dampened demand, leading to an oversupply of inventory.
As many as 70% of homeowners reported recent increases in home insurance costs in Florida, according to Redfin’s survey, a cost surge pricing out many potential buyers.
Housing demand in western New York and the Midwest is heating up the fastest, with per-square-foot prices rising by double digits year-over-year in April: Rochester, New York topped the list, followed by Lake County, Illinois and Buffalo, New York.
Homes in these areas are attractive due to their relative affordability—the typical home sells for around $250,000 in Rochester and Buffalo, lower than the $440,000 U.S. average and a fraction of the $750,000 average in the New York City metro, helping draw remote workers from the far pricier city.
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Key Background
The cooling of Florida’s housing markets is largely driven by a surge in natural disasters, which is resulting in both “more supply and less demand,” according to Redfin senior economist Elijah de la Campa. The increasing intensity of severe weather events, like hurricanes and floods, pushed up insurance costs—which rose 35% year-over-year in Florida, the most of any state, between spring of 2022 and 2023—and drove away potential buyers. But it also destroyed a number of homes—2022’s Hurricane Ian, the costliest hurricane to ever affect the state, destroyed over 5,000 homes and damaged nearly 30,000 more—contributing to more construction and thus adding to an already oversupply of housing and a subsequent market cooldown. In contrast, New York’s housing market is heating up the most, in part due to its relative affordability compared to nearby areas and the rest of the U.S. The top 10 housing markets holding up best include several metros in the greater New York City area: Nassau County, New York, comes in fourth, followed by New Brunswick, New Jersey.
News Peg
Florida has been on a building boom to accommodate the surging demand from newcomers, as the Sunshine State became a migration destination during the pandemic thanks to its appealing weather, lack of state income tax and lower cost of living. In March, six out of 10 metros with the highest annual increase in housing supply were in Florida, according to Redfin. However, many homebuyers have been “priced out,” and the growing concerns over natural disasters and home insurance costs are scaring away buyers.
Crucial Quote
While lackluster demand and booming construction on the Gulf Coast of the Florida Peninsula are “disappointing for sellers,” who might have to sell their homes for less than they hope, “a bigger pool of listings to choose from is good news for the region’s homebuyers,” said de la Campa. “More supply is the best way to bring down prices and combat the housing affordability crisis buyers are facing today—and that’s exactly what’s happening in parts of Florida.”
Tangent
Despite cooling the fastest among major metros, home prices in Florida remain significantly higher than pre-pandemic levels—up 60% in North Port and around 70% in Tampa since 2019, both well above the national increase of 40%. Those elevated home prices and insurance costs, coupled with rising mortgage rates, are deterring potential buyers, including retirees who traditionally flock to the state.
