2024 Florida Housing Market: What to Anticipate

In Northeast Florida, housing prices are generally holding steady, with only slight declines observed in some areas. The primary reason prices aren’t decreasing more significantly is the limited supply of homes on the market. Economists describe this situation as the “lock-in effect,” where homeowners are hesitant to sell because they have nowhere affordable to move. This is largely due to many homeowners having mortgages with interest rates well below 6%, while current rates are higher. Those with mortgages at 3%, 4%, or 5% face the prospect of significantly higher payments if they move.

Florida’s real estate homestead tax portability allows homeowners to transfer part of their homestead assessment difference to a new home. However, long-term homeowners often find their homes assessed well below market value, meaning a new purchase could lead to higher taxes and increased expenses. This combination of factors contributed to home sales across the country hitting a 28-year low in 2023. However, as we enter an election year, interest rates are expected to decrease, potentially increasing the number of listings. Economists, including those at Fannie Mae, believe that lower interest rates might motivate more hesitant homeowners to sell, addressing the pent-up demand from sellers.

The effect of new listings on prices will depend on several factors. If many buyers have been waiting for rates to drop, there might be a balance between buyers and sellers. If listings surpass buyer demand, prices could continue to hold or decline slightly, aligning with the Federal Reserve’s goal of making homes more affordable. Many buyers struggle to afford homes at current rates of 6% or 7%.

If rates fall to about 5%, which is the historical average, prices might still be high for many buyers. It’s likely that rates will decrease slightly, prompting more homeowners to list their properties, but not necessarily increasing new buyer demand. This could lead to a gradual decrease in prices, not as much as the Federal Reserve hopes, but enough to bring more buyers into the market, potentially leading to a slow recovery in prices.

For real estate buyers in Northeast Florida, now might be a good time to explore the market and understand current values. Some sellers, such as those without mortgages, estates, or those needing to relocate quickly, may offer good deals, unaffected by interest rates. Being prepared and informed will help buyers recognize opportunities when they arise.