Florida Condo Values Are Crashing

But only on the coasts; inland FL is safe for now.

Please check out my latest YouTube video about how climate change, condo rules, and insurance costs are driving down Florida home prices.

Below is a transcript of the video in case you prefer to read.

Sixty thousand dollars. That’s how much home equity the typical Cape Coral condo owner lost in the last year. That’s five thousand dollars a month just evaporated. And it has nothing to do with what those condo owners did and everything to do with the changing Florida real estate market.

Now here’s what makes that even stranger. We’re only seeing condo values drop on the coast. In Florida, inland condo values are actually up. Orlando condo values are up eleven percent since last year. The Florida housing market is split into two, and depending on which market you’re in, you’re either building equity or losing it.

The split isn’t an aberration. It’s not just noise in the data. It’s the direct result of three forces. Climate risk, new condo safety laws, and an insurance market that is breaking down. It’s hitting the coast harder than anywhere else inland. Florida is mostly protected for now. The coast is not.

And new 2026 numbers show that the gap is getting wider, not narrowing. I’m Daryl Fairweather, Redfin’s chief economist and author. And in this video, I’m going to show you exactly what is driving this phenomenon, which markets are most exposed, and what the data says happens next.

To understand what’s happening now, we have to go back to 2020. That was when remote work unlocked new options for homebuyers. And many homebuyers were looking at Florida because it has no state income tax, it has warm winters, and housing was relatively affordable. Prices skyrocketed as a result of all these new people moving in.

But here’s the thing about boom cycles: they tend to go bust, but this bust is a little different. This bust might just be getting started.

Booms and busts are not anything new to Florida real estate. We went through this during the foreclosure crisis, where Florida home values skyrocketed in the early two thousands, only to go into steep decline once the economy went into recession.

And this actually goes all the way back to the early nineteen hundreds, too, when railroads were built that extended down to Florida. It caused a real estate frenzy, but then the boom went bust in 1925, there were IRS investigations and negative press, and the Great Miami hurricane sent the region into a recession even before the great depression started.

So Floridians are pretty used to boom and bust cycles, but with climate change increasing the risk of natural disasters, this bust cycle may just be the start of a new trend. Let me give you an example of what’s happening on the ground for Florida homeowners.

Ozzie Linares is a redfin real estate agent (formerly) who lives and works in Miami. Two years ago, Ozzie’s home insurance was pretty manageable, just under two thousand dollars a year. But now that same home insurance policy costs him six thousand seven hundred dollars each year. His flood insurance tripled, jumping from four hundred dollars to over twelve hundred dollars.

That increase is part of the hidden overhead that is causing homeowners to sell and giving home buyers pause.

When it comes to Florida real estate, an Ozzie situation isn’t really unique. According to the Consumer Federation of America, the average Florida homeowner is now paying nine thousand four hundred and sixty-two dollars a year for insurance.

That’s seven hundred and eighty-nine dollars a month, which is more than the car payment for a brand-new Toyota Rev Four. Before you even get to paying your mortgage, you have to spend an inordinate amount of money just for insurance.

And that makes Florida the most expensive state in the country for home insurance. And it’s not even really close. Floridians are paying two thousand five hundred dollars more per year than Louisiana, the next most expensive state, and it’s nearly triple the national average.

What’s happening in Florida is part of a broader trend that’s happening nationally. Home insurance has increased by forty percent in six years, and this is not a linear trend. Between 2019 and 2021, rates were increasing about two percent a year. Then came a five percent jump, and then an eleven percent jump.

The cost of home insurance is going up exponentially, and this should cause real concern. So why is this happening?

Well, a big reason is that insurers are pulling out of Florida. Farmers Insurance pulled out in 2023, dropping one hundred thousand policyholders overnight, Progressive and Triple A scaled back, and many smaller insurers went bankrupt.

These insurance companies are doing the math and realizing they can’t afford to stay in Florida. And this rise in the cost of insurance is spilling over to the broader economy.

Research shows that a five-hundred-dollar increase in insurance premiums is linked to a 20 percent rise in the likelihood of mortgage delinquency in the same year. People are losing their homes because they can’t afford their home insurance. But insurance is just part of the story of what’s happening in Florida.

There was another important change, and it all started with the Surfside condo collapse in 2021. A condo tower collapsed in Surfside, Florida, killing ninety-eight people. And this tragedy set off a change in public policy.

New laws now require regular structural inspections in mandatory reserve funds for buildings that are thirty years or older. And that sounds reasonable, but it’s driving hoa fees sky high. Those are the fees that condo owners have to pay in order to own a unit in a building. You see, condo buildings were deferring maintenance, and they were putting off raising HOA fees.

But this law means that condos need to raise that money now. And condo owners are fitting the bill, and many of them really can’t afford it. In Miami, the typical HOA fee is now eight hundred and thirty-five dollars a month.

And Tampa saw the steepest increase in HOA fees. They were up seventeen percent in just one year. They’re also having to pay special assessments. These are one-time fees that can be more than a thousand dollars to make up for the lack of funds that have been deferred.

When you add up mortgage, property tax, HOA fees, and insurance, the cost of owning a condo has increased beyond what many people are willing to pay. And now condo owners are selling off, and there are very few people who wanna buy.

And this increase in supply, combined with a lack of demand, is causing a price correction, especially for condos on the coast. In Cape Coral and Fort Myers, condo prices went down nineteen percent in just one year. In Fort Lauderdale, they’re down twelve percent.

In Sarasota, it is down ten percent. And these aren’t just small adjustments. These are the kinds of declines that can wipe out the equity of homeowners, making them much poorer than they thought they were. But as I said before, this isn’t happening everywhere.

In Orlando, condo prices are actually up eleven percent. That’s inland. Florida. They have newer buildings, so they’re not necessarily subjected to these condo rules. They have lower flood risk, lower hurricane risk, and lower insurance costs.

The market is not punishing all of Florida. It’s mostly a coastal problem for now.

Florida home sellers haven’t really internalized what’s happening in the market. They’re still listing their homes at 2022 prices, which is causing those homes to sit on the market without any offers. And this means that the price correction is probably not over.

Florida homeowners need to adjust their price expectations down even more if they want to be able to sell. So who are these Florida home sellers, and what’s motivating them to sell now instead of just eating the cost?

Well, there are two types of people who are selling. They’re the people who simply can’t afford to stay. Many retirees come to Florida because of the low cost of living. And because they’re on fixed incomes, they can’t stomach an increase in hoa fees or special assessments. So they have to sell, really, because they don’t have any other options. And then there’s another type of home seller who leaves after a major storm.

Hurricane Helene was a turning point for many Florida homeowners. Don Lidkey, a Redfin agent in Pinellas County, said that a huge part of the population was forced to leave because their homes were flooded. It made people reevaluate whether they even wanted to live in an area with Flutterisk.

Pinellas County saw ninety-three million dollars in damage because of that storm. And many of the people who left didn’t really move far. They just went inland to Pasco County, which has half the flood risk. Pasco County gained twenty thousand more residents than it lost last year.

Now, even though there are more homes for sale in Florida than there are people wanting to buy them, people are still moving in. They’re moving in from other parts of the United States, and they’re moving in from abroad.

Home values are going down, but they’re largely still higher than they were before the pandemic. And one of the reasons that Florida is still attracting people is because it’s a retirement destination.

Baby boomers are one of the largest demographic groups, and they are reaching retirement age and looking at Florida. And baby boomers don’t think about climate risk the way that younger people do.

According to a Redfin survey, only thirty-one percent of baby boomers say they consider climate risk in their home-buying decisions. Compared to fifty-six percent of millennials and fifty percent of Gen Z, the younger generations are more informed about the risk. They tend to believe that climate risk is a real thing that will impact them, and they’re acting on it.

But because Florida is a retirement destination, retirees don’t really care, and they’re still coming to Florida. They’re not really considering climate risk when it comes to that decision.

These people who are retiring in Florida are thinking about the warm weather, the views, the lifestyle, and the climate risk isn’t going to stop them. And that mentality is understandable. Why worry about climate disasters if you may not live to see them? But the costs of climate change are manifesting right now.

Insurance costs are going up, and even the Surfside condo collapse had to do with weather. The reason the condo collapsed was due to erosion from the sea and a lack of maintenance to prepare for that climate. So what are the climate risks that Florida faces? It varies a lot by metro.

In Miami, half of the homes have a severe flood risk. In Saint Petersburg, it’s forty-five percent of homes. In Key West, ninety-nine percent of homes face severe flood risk. But then over in Orlando, it’s less than five percent of homes that have severe flood risk.

That data comes from First Street, and the market is starting to price this in, especially for those coastal condos. That’s because condo owners have to face those costs right now because of new rules.

Owners of single-family homes face similar risks, but they don’t have to internalize them if they don’t want to. They can reduce their insurance coverage if their home is paid off, or they can just go without insurance entirely, so they can keep their heads in the sand more than a condo owner can.

But the same risks are there regardless of whether you are a single-family homeowner or a condo owner. And even though single-family home prices haven’t come down in Florida, sales volume has come down.

And that’s because home sellers and home buyers just can’t see eye to eye on what the value of these homes should be, which means that a price correction is still coming.

Now, you might be skeptical that this is due to flood risk, but we actually have experimental evidence that shows that homebuyers avoid flood-risky properties. When Redfin first started showing flood risk on our website and app, we did an experiment where we showed half of our users the flood risk, but half did not see it.

Among the people who saw the flood risk scores, those who were looking at extremely or severely risky homes ended up buying homes with half as much flood risk. That proves that people are paying attention to climate risk and they’re using it to make decisions about which homes they want to buy.

And that means that down the line, homes that have more flood risk are going to have fewer buyers and command lower prices than homes that have lower flood risk. So it’s likely that the climate change price correction is only just getting started.

Research published in Nature Climate Change estimates that US residential real estate exposed to flood risk is overvalued by $121 billion. The high estimate puts it at 237 billion dollars in overvaluation. So what will happen to Florida real estate over the next few decades?

Here are some scenarios for what I think could happen. Scenario one is what I call the slow squeeze. That’s where insurance costs keep going up, HOA fees keep rising, and maintenance costs keep increasing.

The gap between what homesellers expect and what buyers will pay will continue to widen. More retirees will be forced to sell because they’re on fixed incomes.

And condo prices, especially in coastal Florida, will continue to slide slowly at first, but then faster as the insurance market becomes thinner and more expensive. It’s not necessarily a crash. It’s not a cliff. It’s a slow slide where home values are eroded. But this scenario depends a lot on how strong the demand is. People still want to retire in Florida. They still want to vacation there.

And for international buyers who are deciding between a Florida home or a home in the Caribbean, Florida may actually seem like the safer option. It will still be expensive to maintain those homes and to pay for insurance, but there could be quite a few people who still want to take on that cost.

Florida is home to some of the most expensive home purchases in the entire country. So people who have a lot of money don’t mind spending it in Florida because of the lifestyle that it offers. But if demand is strong enough, Florida home values may continue to go up. They just won’t go up as much as they would have if there wasn’t as much climate risk.

So scenario two is an inland renaissance in Florida. People move away from the coast, where the risk is the most severe, and they relocate to inland Florida, where the risk is much lower.

Even within metros, we could see relocation. Neighborhoods like Little Haiti, which are more elevated, could see their home values increase significantly, whereas the homes that are directly on the coast could see their values crash.

Scenario three is the scariest. It’s the shock event. A major hurricane, like a category four or higher, could hit a densely populated area in Florida. And that could cause insurance companies to accelerate their exits from the market.

FEMA, the national flood insurance program, is already financially strained, and it faces a lot of questions about solvency. Prices in coastal Florida wouldn’t erode under that scenario. They would fall sharply because you need insurance in order to get a mortgage, and most homebuyers need a mortgage in order to buy a home. So if insurance pulls out all at once, it could cause a swift crash in real estate values.

This isn’t a prediction; it’s more of a tail risk. But given what we know about hurricane frequency and the intensity that is increasing, it’s not an unthinkable scenario, and it’s one that we should prepare for.

But whichever scenario plays out, the underlying dynamic is still the same. Climate risk is starting to be priced into Florida real estate. The market is catching up to what climate scientists have been saying for decades.

So if you own a home in Florida or you’re a Florida real estate agent, this news might sound really scary. The most important thing you can do as a home seller in Florida is to price your home correctly. You don’t want it sitting on the market because if prices are eroding, you’ll end up getting a lower price the longer your home sits.

And if you’ve listened to this whole video, and you still wanna buy in Florida, you still value the lifestyle, that’s a valid choice. But you should go in with eyes wide open about the cost that you face now, and how those costs could increase in the future.

As I said before, it’s not a foregone conclusion that homes are going to go down in value. If there are still enough people who want to live in Florida, home values could keep going up.

But your cost of maintaining homes and your cost of ensuring those homes will also increase. So you need to make sure that you’re budgeting for those increased costs. It’s pretty hard to get a grip on how much insurance costs and maintenance costs are going to increase.

But if you look at Redfin on a home listing, you’ll see a climate score. You’ll see scores for flood risk, for storm risk, and for heat risk. And that can give you an idea of what you’re in for.

Now, these climate models aren’t perfect, but they’re the best that climate scientists are coming up with, and it’s the best information that we have. It’s also the same information that insurance companies are using in order to do their own risk analysis.

So you should act like the insurance and think about your own personal risk and how much you’re willing to take on when you go to buy a home, and this applies to whether you’re in Florida or other climate-risky parts of the country.

Get an insurance quote before you make the offer. Most people wait until their offer is already accepted, and then that could cause a deal to fall apart if they can’t find insurance or the insurance is too expensive.

So make sure you do your research ahead of time and call up the insurance companies and ask them how much it would cost. They won’t be able to tell you how much it will cost in the future, but the least that you should know is how much it will cost you on day one of home ownership.

And even if you’re not interested in buying a home in Florida, you can still learn something from what’s happening there. Because there are climate risks all over the country, whether it’s flood risk, hurricane risk, or wildfire risk. These will all increase the cost of insurance and the cost of home ownership.

So when you’re deciding whether to buy a home, make sure you check those climate scores so you know exactly what you’re getting yourself into, and you can at least have an idea of how risky that home purchase will be.

And if you’re not thinking of buying a home and you want to rent a home, this information still matters because many of these costs are going to be passed down from landlord to renter.

Climate change is going to disrupt real estate, no matter whether you’re a renter or a homeowner, and no matter where you live. It’s really a global phenomenon that’s going to impact everyone financially.

So before I go, I want to ask you something. Would you buy a home in Florida after hearing everything I just said? What about other parts of the country? Are you worried about climate risk? Where you live and how it could impact your ability to buy a home or the value of your home? Let me know in the comments. Please like this video, subscribe, and stick around to watch the next video.