Home prices in Florida are now 3% below the peak they reached in May 2024.
This is in itself is not particularly meaningful. About half of the states are now below their recent peaks. And among these states, at 3% below the peak, Florida has fallen by less than many. Arizona, for example, is 7% below its peak. Washington DC is more than 9% below its peak. Based on percentage changes in prices since 2020, Florida is still in the top 10.
What does make Florida uniquely worrying is that—while most states that have fallen below their peaks are now recovering, with prices rising y/y—prices in Florida continue to decline and by much more than everywhere else. In only a handful of states are home prices falling y/y. In Florida they’re falling at the fastest rate (-3%).
Prices in Florida are Lower Than They were One Year Ago
We might now reasonably begin to wonder if what's happening in Florida will stay in Florida or if the state's price action is a canary in a coal mine, presaging falling prices in the rest of the country.
There are certainly good reasons to worry. Falling prices in Florida are more meaningful than similar price action elsewhere. For one, Florida is amongst the most populous states, of course. But more importantly, national home prices track those in Florida with more fidelity than they do any other state. Florida’s housing market is high beta, but it is still—at least historically—the least idiosyncratic of all states.
National Prices Track Florida
Our sense is that the factors responsible for the downturn in Florida are sufficiently idiosyncratic that it's more likely than not that the price pressures we see there are not a sign of what's to come for the rest of the country. But it’s a close call.
For one, the state is grappling with the accelerating impacts of climate change, including more frequent and severe hurricanes, which have led to a surge in insurance premiums—doubling in some areas over the past three years.