Florida Leads Among the Fastest Cooling Housing Markets of 2025

Florida, the Sunshine State, is now home to some of the fastest-cooling housing markets in the country. Yes, you read that right. For those keeping a close eye on real estate trends, the year 2025 is shaping up to be a period of significant adjustment, and Florida is at the forefront of a nationwide cooling, with several of its cities experiencing notable declines in home prices.

Florida Leads Among the Fastest Cooling Housing Markets of 2025

The data, brought to light by the analytics firm Cotality and further examined by Realtor.com, paints a clear picture. While many areas are seeing a slowdown, Florida stands out with seven of the top ten coolest housing markets in the U.S. This isn't just a minor dip; it's a noticeable shift from the frenzied pandemic-era market. What does this mean for buyers and sellers aiming to navigate the Sunshine State’s real estate scene in 2025? Let's dive in.

Why the Chill in the Sunshine State?

It might seem counterintuitive for a state that attracts so many people. But when I look at this data, a few key factors immediately jump out, explaining why Florida is taking the lead in this cooling trend. It's not just one thing; it's a combination of elements that have created a perfect storm.

Key Factors Contributing to Florida's Cooling Market:

• Overcorrection from the Pandemic Boom: Remember those wildly soaring prices from 2020-2022? Many Florida markets, particularly those that saw explosive growth, are now experiencing a natural “overcorrection.” Prices went up too much, too fast, pushing many potential buyers out of reach. Now, they're coming back down to a more sustainable level.
• Rising Insurance Costs: This is a massive one for Florida. Homeowner's insurance premiums have become astronomical, especially in coastal areas prone to hurricanes and flooding. Cotality's analysis highlighted this clearly: Cape Coral, for example, has one of the highest premium-to-market ratios in the nation. For a $350,000 home, annual insurance could easily be around $7,700. That's a huge monthly expense that many buyers simply can't absorb, especially when combined with rising mortgage rates.
• Affordability Challenges: Even without state income tax, the combination of higher insurance, potentially rising HOA fees, and elevated home prices (even if they are declining) has made affordability a significant hurdle for many Floridians. This means less demand, leading to price adjustments.
• Slower Job Growth in Certain Areas: As one real estate broker pointed out, many of these cooling markets are retirement or second-home destinations. They often lack diverse job markets that attract new residents for employment. Without constant influx of people moving for jobs, demand for housing naturally moderates.

The Coolest of the Cool: Florida’s Top Markets by Decline

The data from Cotality gives us a clear rundown of where the cooling is most pronounced. It’s important to note that these are year-over-year declines based on data up to September.

Top 10 Coolest Housing Markets of 2025 (Based on Year-Over-Year Price Declines):

Rank	City, State	Year-over-Year Price Decline
1	Champaign, IL	-7.9%
2	Cape Coral, FL	-7.1%
3	Naples, FL	-6.7%
4	Punta Gorda, FL	-6.2%
5	Sebring, FL	-5.2%
6	North Port, FL	-5.1%
7	Brownsville, FL	-4.8%
8	Wichita Falls, TX	-4.8%
9	Kahului, HI	-4.7%
10	Sebastian, FL	-4.6%

My Take: Looking at this list, it’s clear that while other states have markets cooling, Florida is overwhelmingly represented. Cape Coral, at the top of Florida's list, and second overall, is particularly interesting. It’s a large city known for its canal system, and it's clearly feeling the combined pressure of rising costs and a market recalibration.

Naples, Punta Gorda, and other southwest Florida spots are also seeing significant cooling, which makes sense given their popularity as desirable, often second-home or retirement destinations, which can be more volatile.

Deep Dive: Cape Coral – A Case Study in Cooling

Cape Coral, with its extensive network of canals, is often considered a prime example of the challenges facing some Florida markets. As mentioned, it saw a 7.1% year-over-year drop in home prices as of September, making it the second-coolest market nationally according to Cotality.

Realtor.com analysis of August data showed that a typical single-family home in Cape Coral sold for about 7% less than the previous year. More strikingly, compared to the pandemic boom era of August 2022, prices have fallen by over 13%. This isn't just a small tweak; it's a substantial shift for homeowners and a potential opportunity for buyers.

What’s Driving Cape Coral’s Trend?

• Insurance and Flooding Concerns: Being on the Gulf Coast means vulnerability to hurricanes and subsequent flooding. This translates directly into higher insurance premiums. The premium-to-market ratio is a stark indicator of this burden.
• Foreclosure Rates: Reports from ATTOM indicated Cape Coral had one of the highest foreclosure rates among larger metros in Q3 2025. While some experts, like Karen Borrelli of Royal Palm Coast Realtor Association, suggest it’s not a “disaster looming,” an uptick in foreclosures is a sign of financial strain for some homeowners.
• Market Overcorrection: The sentiment from real estate professionals like Hannah Jones, senior economic research analyst at Realtor.com, is that Cape Coral, like many other Florida markets, experienced rapid price growth and is now undergoing a necessary rebalancing or correction.

Despite these challenges, it's important to note that Borrelli also mentioned that the number of sales hasn't drastically dropped. Buyers are still active, but they are seeking value. This means homes priced realistically are still selling, and at more affordable prices than before. The cooling is primarily in the pricing, not necessarily in the overall transaction volume, which is an important distinction.

Markets to Watch: Beyond the Top 10

Cotality also tracks markets with a high risk of future price declines among the top 100 CBSAs (Core Based Statistical Areas). While the exact list was not provided here, the implication is that other Florida markets, perhaps those not in the top ten but still experiencing pressure, should be on our radar.

Common characteristics of these “markets to watch” often include:

• High reliance on seasonal tourism or retirement income.
• Limited diversified job markets.
• Increased vulnerability to natural disasters (hurricanes, flooding).
• Rapid price appreciation during the pandemic that now needs to settle.
• Rising insurance and property taxes.

Is It a Buyer’s Market in Florida Now?

This is the million-dollar question, isn't it? Based on my understanding of these trends and the expert opinions I've reviewed, for certain segments of the market and in specific locations, it’s definitely becoming more favorable for buyers.

Here’s why I think it’s a good time to consider buying in some Florida markets:

• More Negotiating Power: As prices cool and some sellers become more motivated, buyers can potentially negotiate better deals. The era of being in a bidding war for every property seems to be largely over in these softening areas.
• Greater Affordability: With price declines and a stabilization (or slight decrease) in competition, homes are becoming more accessible for those who were priced out during the boom.
• Opportunity for Value: Homes that might have been out of reach a year or two ago are now available at more reasonable prices. Buyers looking for value, rather than just chasing appreciation, can find good opportunities.

However, it’s not a simple “yes” for everyone. Buyers still need to be realistic about current mortgage rates and the ongoing high cost of homeownership in Florida, especially when it comes to insurance.

What About Sellers in Florida?

For sellers, the message is less about panic and more about realism.

• Adjust Expectations: The days of automatically getting multiple offers above asking price are likely behind us in these cooling markets. Sellers need to price their homes competitively based on current market conditions, not past asking prices from the peak.
• Presentation Matters: With more inventory and buyers being more discerning, a well-maintained and attractively staged home will always perform better. Price alone isn't enough; the home needs to look appealing.
• Consider Concessions: Be open to offering concessions, such as contributing to closing costs or buying down the buyer's interest rate, if it means getting the deal done.
• Be Prepared for Longer Listing Times: Homes may take longer to sell than they did during the boom. Patience is key.

Some sellers, as noted in Miami, are opting to delist altogether and wait for market conditions to improve. This is a valid strategy if they don't need to sell immediately, but it requires careful consideration of carrying costs.

Looking Ahead: A Market Rebalancing

The cooling trend in Florida is not necessarily a sign of a housing market collapse, but rather a rebalancing. The extreme highs of the pandemic are giving way to more sustainable price levels. While Cotality and Realtor.com point to these specific markets as “cooling,” it's important to remember that demand for living in Florida remains strong due to its lifestyle, climate, and lack of state income tax.

The key for anyone involved in the Florida real estate market in 2025 will be understanding these dynamics: the impact of insurance costs, the lingering effects of pandemic-era overvaluation, and the underlying demand for the state’s desirable lifestyle. For buyers, it presents an opportunity to enter the market at more favorable prices. For sellers, it’s a call for realistic pricing and a patient approach. This cooler market is a sign that the frenzied rush is over, and a more grounded, value-driven real estate environment is taking shape in the Sunshine State.