Florida Real Estate Forecast for the Next 5 Years

November 8, 2023 - 11 min read

Much can transpire over a span of five years. We may have a different president, with the balance of power shifting in Washington. Inflation could drop significantly from its current high levels. Perhaps electric cars will be all the rage. And with any luck, mortgage rates become more affordable.

Curious how the Florida real estate market will fare between now and 2028? We reached out to several Sunshine State-based experts for their Florida real estate forecast for the next 5 years. This article will share the latest statewide housing data along with predictions on Florida home prices, rates, inventory, and other key market indicators.

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Florida housing market trends and stats

Before delving into the Florida real estate forecast for the next 5 years, it’s constructive to take a closer look at the current Florida housing market, based on the latest Redfin data and most recent Florida Realtors data (September 2023 numbers):

  • $402,900 – median sale price (up 3% year over year)
  • $572,753 – average sale price (up 7.5% year over year)
  • 21,335 – number of homes sold in September (up 6.1% year over year)
  • 43 – median days on the market (up 8% year over year)
  • 28,198 – number of newly listed homes (up 8% year over year)
  • 4 – months of supply available (no change year over year)
  • 14.9% – percentage of homes that sold over list price (down 3.8% year over year)
  • 27.6% – percentage of homes with price drops (down 1.4% year over year)

Why are people moving to Florida?

According to Redfin, Florida has garnered significant attention as a relocation destination, with four of its cities ranking in the top 10 nationwide for incoming residents. Specifically, Orlando secured the third position on the list, with a net inflow of 3,700 individuals between August and October 2023. Following closely are Sarasota at sixth place with 3,600 newcomers, Cape Coral at eight with 3,400 arrivals, and Tampa at tenth, where 2,800 individuals have moved.

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In 2022, several Florida areas demonstrated substantial inbound migration rates. Ocala, for instance, topped the list nationally, as per the National Association of Realtors, with an impressive 57.1% inbound move rate. Tallahassee secured the second position with a 56.6% inbound move rate, while Deltona stood at sixth place with a rate of 55.7%, and Miami ranked ninth with a 55.2% rate.

Notably, Florida emerged as the leading state for net domestic migration gains in 2022, boasting an impressive figure of 318,855, as reported by the National Association of Realtors. Furthermore, it claimed the title of the fastest-growing state in the previous year, experiencing an annual population increase of 1.9%, marking the first time since 1957 that Florida’s population outpaced growth elsewhere in the country.

It’s worth noting that none of Florida’s cities are currently featured in Redfin’s list of the top 10 metropolitan areas people are relocating from. The cities on this list include San Francisco, New York City, Los Angeles, Washington DC, Louisville, Kentucky, Chicago, Boston, Hartford, Connecticut, Detroit, and Denver.

Florida housing market overview

What do experts think when it comes to the Florida real estate forecast over the next 5 years? Most pros concur that Florida continues to be a strong real estate market at the state level, characterized by steady sales prices and closing rates. However, sellers have had to make adaptations in response to a decline in buyer demand in recent months.

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“Home prices have cooled slightly from their peak but remain elevated due to high demand and tight inventory,” says Andrew Lokenauth, a Florida-based housing market expert. “Mortgage rates have risen significantly from their historic lows in 2021, further reducing buying power. Sales volumes have moderated but buyer interest remains strong – especially from out-of-state migrants. Overall, it remains a seller’s market, but conditions are expected to become more balanced over the next 12 to 18 months.”

Vivian Lehman, a broker with You Have Realty in Maitland, Florida, notes that statewide sales volume has declined for the last two years, but inventory remains low.

“Fortunately, even with higher interest rates, buyer interest is still there because Florida has been able to maintain – if not increase – median home values from last year. With a steady stream of new residents, Florida continues to have a demand for housing,” she says.

Blake Bahut, a broker associate and Realtor with Realty ONE Group, says the simplest word to describe the current Florida real estate market is “steady.”

“It’s similar to 2017 through 2019, when homes priced well tended to sell within a few weeks of being on the market, and homes priced too high tended to sit,” explains Bahut. “Many would-be buyers are on the sidelines, waiting for interest rates to come down just enough so they can purchase a home with their ideal budget. Thankfully, the interest to purchase is just as high as ever, especially for millennials. However, many find themselves renewing their leases for another year or more, hoping to see improvements in housing supply and mortgage rates.”

Will home prices drop in Florida in the next 5 years?

While it’s not easy to guess the Florida real estate forecast for the next 5 years, here’s what our panel predicted:

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Matt Dunbar, senior vice president of the Southeast Region for Churchill Mortgage: “Florida’s housing prices are set for sustained growth. The Sunshine State continually draws migrants and retirees, ensuring a steady housing demand. A glance at the numbers tells the tale: There were 155,000 listings in January 2021, which sharply decreased to 36,000 by February 2022, only to resiliently climb back to 91,000 by September 2023, per the U.S. Census Bureau. With the rise in housing developments and the potential for mortgage rates to stabilize, a measured yet optimistic growth pattern for housing seems likely by 2025.”

Lokenauth: “I anticipate that home prices will decline moderately over the next 12 to 18 months as buyer demand softens further due to high mortgage rates. Price declines could reach 10% to 15% in some markets. However, strong population growth from migration and positive longer-term economic fundamentals for Florida will support a rebound in prices starting in 2024. I expect a return to moderate, sustainable price appreciation of 3% to 5% annually from 2024 to 2028.”

Blahut: “I expect home prices in Florida to continue to rise over the next 5 years. With Florida continuing to be one of the hottest destinations for migrants from the north, I anticipate the demand to keep pushing values in a positive direction overall over the next 5 years.”

Lehman: “I believe housing prices will continue to rise, especially since inventory is low. As we progress from 2025 to 2027, I believe we will see a more stable market of supply and demand, and pricing will reflect the condition of the home.”

Will mortgage rates fall in Florida in the next 5 years?

When asked how mortgage interest rates will fare from now through 2028, our experts offered differing projections.

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Blahut: “I expect interest rates to increase slightly before eventually decreasing. I do anticipate that they will be noticeably lower 5 years from now. I believe economic factors, such as a possible recession, will exert downward pressure on rates to stimulate spending. This will ultimately attract many potential buyers to the market but could also lead to periods of overheating, even if only for one or two years.”

Lehman: “We may see a drop towards the middle of next year and then hover in the 6% and 7% range moving forward. Banks will come out with different products that will temporarily appease buyers like adjustable rate mortgages or interest-only loans.”

Dunbar: “Mortgage rates are set to experience some easing, particularly as we approach mid-2024. That said, it might be wishful thinking to anticipate rates as low as those witnessed in 2020 and 2021. Current economic signals suggest the Federal Reserve may be winding down its rate hike measures. With inflation figures currently hovering around 3.7%, a cautious stance on any immediate rate drops is warranted. However, taking a broad economic perspective, a sense of equilibrium and predictability seems to be on the horizon for mortgage rates.”

Lokenauth: “Rates will remain volatile over the next year but likely trend downward starting in 2024 as inflation eases. I expect rates dropping back into the 5% to 6% range by late 2024.”

Florida real estate forecast for the next 5 years: Will inventory increase?

If supply can keep up with demand in Florida, the statewide market should thrive and make matters easier for buyers. Our pros offered these Florida housing market predictions:

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Lokenauth: “Inventory will improve over the next 2 years as the market shifts more in buyers’ favor, likely rising 30% to 40% above 2022 levels. But strong population growth will keep inventory tight long-term.”

Lehman: “We will see a steady increase in housing supply. The National Association of Home Builders says 50% of new single-family construction is happening in the South. As loan products adjust and fears of recession abate, sellers will come off the fence of selling and further increase the supply of homes.”

Dunbar: “The next 5 years paint a picture of expansion for Florida’s housing inventory. Significant indicators include an impressive 11% uptick in construction employment since August 2018 and a steady increase of new housing permits, peaking at 11,200 in August 2023. As the economic environment evolves, we can expect a surge of homes entering the market. However, it’s worth noting that many homeowners, given their favorable past financing rates, may choose to stay put. Still, Florida’s diverse attractions should keep housing demand robust and closely aligned with supply.”

Blahut: “I expect inventory to remain a persistent challenge, particularly in the entry-level and affordable price points. That being said, inventory is likely to stay steady to relatively low levels due to the ongoing migration to Florida and builders struggling to keep up with the demand.”

Will we shift to a buyer’s market in Florida in the next 5 years?

Currently, sellers hold the upper hand in the Sunshine State. But that leverage can shift over the next 60 months. So what are the Florida real estate forecast next 5 years? Our industry insiders weighed in.

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Blahut: “I anticipate it will be a seller’s market overall over the next 5 years. Currently, there is a slight trend toward a buyer’s market. The combination of homes staying on the market a little longer and less competition, as other prospective buyers are waiting for interest rates to decrease before re-entering the market, has created the best opportunity to purchase a home in 2023 and 2024. However, by 2028, and likely even before that, lower interest rates will likely encourage many aspiring homeowners to make their move, along with many others.”

Dunbar: “For the immediate future, Florida’s housing market seems to tip in favor of sellers, largely influenced by the current inventory trends. It’s been a historical dance where supply often lags demand, and this rhythm shows no signs of changing soon. But with tangible growth in the construction arena and more homeowners listing their properties, a balance may be on the horizon by 2026. It’s essential to remember, however, that Florida’s enduring appeal means that the dynamics between buyers and sellers will have their intricacies and might differ regionally.”

Lehman: “It will always be a seller’s market when inventory is low. I think as our supply stabilizes in the next few years, then we will see a more stable market of supply and demand. I don’t anticipate Florida shifting quickly to a buyer’s market for at least a few years, because of our steady influx of new residents.”

Lokenauth: “It will become more of a buyer’s market in 2023 to 2024 before shifting back to a seller’s market in 2025 to 2028. There will be windows of opportunity for buyers during the next downturn.”

Florida real estate forecast for the next 5 years: Will the housing market crash?

Is there a future market crash in the Florida real estate forecast for the next 5 years? According to the Florida professionals we polled, it remains highly unlikely that a serious housing market recession or real estate sector crash will occur between now and 2028.

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Ðunbar: “When weaving the narrative for the coming half-decade, a drastic downturn in Florida’s housing market seems unlikely. This confidence stems from Florida’s solid employment figures, highlighted by its 2.7% unemployment rate, notably lower than the national average of 3.8%. While external global and national economic factors can introduce uncertainties, Florida’s foundational market signals appear sturdy.”

Lehman: “A crash is unlikely when housing inventory is so low in Florida. The double-digit percentage increase in value that Florida experienced has given most homeowners a healthy equity position. If a homeowner has to sell, there is a very small percentage of them that would have to go the short sale route which inherently decreases values.”

Lokenauth: “A moderate downturn is likely over the next 12 to 18 months, but conditions do not point to a major multi-year crash. The market will be healthier and more balanced after this correction.”

Blahut: “I believe there will be a housing correction, and we are currently experiencing it. This correction is essentially self-inflicted and can be attributed to the higher interest rates implemented to combat inflation. The demand for homeownership hasn’t diminished; it’s merely on hold for many individuals due to the affordability crisis. This situation should see some improvement once interest rates decrease sufficiently to enhance affordability. Assuming the economy remains relatively stable and the employment rate doesn’t reach recession levels, I expect home purchases to remain a significant component of most working professionals’ financial plans. This, in turn, should not result in a housing market crash or a major recession.”

Buying a home in Florida over the next 5 years

Claiming a residence in Florida should be a fairly safe bet and worthwhile purchase in the coming years, the experts concur. Here’s what our experts had to share about the buyer side of the Florida real estate forecast next 5 years:

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Lokenauth: “Buying a home in Florida remains a good investment over the next 5 years due to strong population and economic growth. While there may be some short-term price declines, home values should continue appreciating over the long run. Being able to lock in a mortgage rate may also help secure affordability long-term.”

Blahut: “I believe specific regions of Florida represent great investment opportunities over the next 5 years. With over 1,000 new residents moving to Central Florida every week, it’s evident that the area is still on an upward trajectory in terms of growth. Favorable job market conditions, ongoing migration, and the sustained demand for the Sunshine State make it one of the best places to invest in over the next 5 years, especially in major metros like Orlando, Tampa, Jacksonville, and Miami.”

Dunbar: “Looking at the combination of encouraging signs, the upcoming 5 years present Florida as an appealing prospect for real estate investments. The synergy of its low unemployment figures, enthusiastic construction endeavors, tax incentives, and overarching economic health makes a persuasive case. Although all areas are prone to ebbs and flows, Florida’s real estate market, on the whole, appears set on an ascending path.”

Lehman: “Yes, buying a home in Florida is a good investment over the next 5 years, assuming inflation eases and the likelihood that mortgage rates will come down. Let’s not forget that 2024 is an election year. We will see builder/developer confidence increase. Inventory will not only increase by new build activity but resale homes as well.”

Here are the 10 most competitive Florida cities, Redfin reports:

  1. Oviedo
  2. Alafaya
  3. Pasadena Hills
  4. Carrollwood
  5. Ocoee
  6. Pinellas Park
  7. Largo
  8. Seminole
  9. Altamonte Springs
  10. Sanford

Selling a home in Florida in the next 5 years

As the data earlier in this story indicate, most home sellers in Florida can still count on a relatively healthy sale price, with median sale prices up 3% year-over-year.

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Yet, in the face of persistently high mortgage rates and limited housing inventory, for the foreseeable future, numerous sellers may encounter difficulties in securing the offers they desire or in achieving swift property sales. This challenge is further underscored by statistics indicating that the median time to contract has increased by in the past year, now standing at 28 days, while the median time to complete a sale has risen to 70 days.

Per Redfin, here are the 10 metros with the fastest-growing sales price:

  1. Sunrise: 30.9%
  2. Palm City: 29.4%
  3. Miami Beach: 27.8%
  4. Nocatee: 23.3%
  5. West Palm Beach: 23.3%
  6. New Port Richey: 20.3%
  7. Marco Island: 20.1%
  8. St. Petersburg: 19.8%
  9. Kendall: 19.5%
  10. Weston: 19.5%

The bottom line: 5-year Florida housing market outlook

Compared to many states across the country and other key housing markets, the Florida real estate forecast next 5 years appears relatively promising. That’s because the Sunshine State remains a popular moving destination among retirees, those seeking to avoid state income taxes, Americans yearning for warmer year-round weather, and others. Purchasing a home here may also prove to be a sound investment in the long term, considering the steady growth in home values and the consistently high prices that many homes for sale in Florida demand.

If you’re considering the purchase of a home in Florida, do your homework. Consult closely with a trusted real estate agent, and carefully consider your life and financial goals over the coming years.

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Erik J. Martin
Authored By: Erik J. Martin
The Mortgage Reports contributor
Erik J. Martin has written on real estate, business, tech and other topics for Reader's Digest, AARP The Magazine, and The Chicago Tribune.
Aleksandra Kadzielawski
Reviewed By: Aleksandra Kadzielawski
The Mortgage Reports Editor
Aleksandra is the Senior Editor at The Mortgage Reports, where she brings 10 years of experience in mortgage and real estate to help consumers discover the right path to homeownership. Aleksandra received a bachelor’s degree from DePaul University. She is also a licensed real estate agent and a member of the National Association of Realtors (NAR).