Real estate investors are pulling back more quickly in Florida than in the rest of the US, as the state’s property crisis worsens.
Out of the top five areas where investor purchases have dropped the most, three are located in Florida, according to a report by Redfin.
With its warm weather, beautiful beaches, affordable homes and no state income tax, Florida for years drew investors looking to flip homes or generate rental income.
Florida also saw a pandemic-era spike that had millions of Americans flocking there, but since then fewer home-seekers are opting for the southern state due to a noticeable decline in affordability and problems with natural disasters.
According to the report, Orlando, Miami, and West Palm Beach all saw significant home purchasing lows.
Investors are buying fewer homes for some of the same reasons as regular Americans, due to an uncertain economy and high mortgage rates, among other factors.
Investor purchases fell 27.5 percent year over year in Orlando, more than any other major U.S. metro.
This was followed by Chicago, which was down 23.3 percent, Miami, which was down 21.3 percent, Atlanta, which was down 18.4 percent and West Palm Beach which was down 14.5 percent.
US real estate investors are pulling back fastest from Florida
Investor market share also dropped the most in Florida, according to Redfin.
They purchased 20.7 percent of homes that sold in Orlando in the fourth quarter of last year, down from 26.6 percent a year earlier.
That was the biggest drop of any city in the US.
In Jacksonville, FL, investors bought 21.1 percent of homes that sold, down from 25.8 percent.
Investors are also abandoning the formerly popular Florida cities because the outlook for earning a profit from real estate investments is bleak. It’s also not an ideal time to sell due to an unstable economy.
Coastal Florida is also suffering amid the increasing frequency of natural disasters, sky-high HOA fees, and flood insurance costs.
Another problem in Florida is that investors looking to sell for a profit would have a lot of competition, with for-sale inventory at a record high.
The number of unsold homes in the Sunshine State rose almost 23 percent year-over-year in January, according to a separate report from Redfin.
There were 172,209 homes for sale in Florida at the end of January, the highest inventory of any month on record.
Active listings are at a record high in eight of Florida’s metros, such as Cape Coral, North Port-Sarasota and Deltona-Daytona Beach.
Most of the eight metros are on the coast where there is a high concentration of condos – the type of home worse hit by surging HOA and insurance fees.
New legislation passed following the Surfside building collapse in 2021 that killed 98 people now requires structural inspections for condos more than 30 years old and additional money to be set aside for repairs, leading to an increase in required payments.
Investors are abandoning the formerly popular Florida cities because the outlook for earning a profit from real estate investments is bleak
More frequent natural disasters in the state, such as hurricanes and flooding, have driven up insurance costs and led homeowners associations to raise fees in anticipation of repairs and mitigation needs.
Across the rest of the US, at the end of 2024 real estate investor purchases were at the lowest they’ve been since 2016.
Just 47,004 homes were purchased in the fourth quarter.
Also making real estate investments too risky is inflation, tariffs and job uncertainty, causing many investors pull back on housing.
The high mortgage rates also make it more expensive for investors who would take out a loan to buy a home.
Florida has an abundance of homes for sale sitting on the market
Pictured: The aftermath of the collapse of a condo building in Surfside, Florida. The disaster prompted state lawmakers to more stringently regulate condos, which is having a devastating effect on the market
Even many investors who would pay all cash are hesitant because of home-flipping costs and other expenses.
They’re also not seeing a high rate of return and many worry about selling at a loss.
Investors hoping to rent or flip a property purchased just 17.1 percent of U.S. homes that sold in the fourth quarter, the lowest level for that time of year since 2020.
Meanwhile, those looking to build a home are dealing with President Donald Trump’s administration’s threats to impose tariffs on China, Mexico and Canada, which will drive the cost of home building materials up and send new home prices soaring.
From lumber to drywall, to appliances and finishings, much of what goes into an American home comes from outside the country’s borders.
