For the past decade, Central Florida has experienced a tight housing market with limited inventory, making it a competitive landscape for buyers. However, that trend has now reversed. The number of homes available for sale has reached its highest level in 10 years, giving buyers significantly more options.
This increase in inventory can be attributed to several factors, including higher mortgage rates, economic uncertainty, and sellers holding out for past peak pricing. As a result, we are seeing longer listing times and fewer multiple-offer situations compared to the pandemic-era boom.
One of the clearest signs of a cooling market is the uptick in price reductions. In many cases, sellers are being forced to adjust their expectations as homes sit longer without attracting offers. This is a stark contrast to the past few years when properties were often selling above asking price within days.
Buyers now have more negotiating power, and with the increased inventory, they have the ability to be more selective. Sellers who are serious about moving their homes off the market must price competitively and be prepared to negotiate.
Despite the increase in price reductions, overall home sale prices have remained relatively steady. However, there is a noticeable downward trend forming as sellers adjust to market conditions. While we haven’t seen a significant drop in median home prices yet, the growing number of price cuts suggests that prices could soften in the coming months, especially if inventory continues to build and demand remains moderate.
Sellers who price their homes accurately from the start will likely fare better than those who overprice and have to make reductions later. Buyers, on the other hand, should keep an eye on pricing trends in their desired areas, as they may find better deals in the near future.
During the height of the pandemic-fueled housing boom, homes in Central Florida were selling at record speed—often within days of being listed. That pace has now slowed considerably, with the average days on market returning to pre-COVID levels.
This shift is another indicator that we are no longer in a frenzied seller’s market. Buyers now have more time to make decisions, conduct inspections, and negotiate terms, rather than feeling obligated to adhere to less favorable terms.
The absorption rate, which measures how long it would take to sell the current inventory at the existing sales pace, now indicates a 7-month supply of homes. Generally, a balanced market is considered to have a 5–6 month supply, while anything above that is typically categorized as a buyer’s market.
A 7-month supply suggests that there is more inventory than demand, giving buyers the upper hand in negotiations. This shift may encourage more cautious or hesitant buyers to re-enter the market as they recognize a growing advantage.
While the market is currently leaning in favor of buyers, we anticipate a significant uptick in demand as we approach spring. Historically, the spring and early summer months bring an increase in homebuying activity as families prepare to move before the next school year and seasonal buyers return.
As the above chart shows, January is typically the bottom of demand for the year and demand accelerates into spring and summer. This has been true consistently in past years regaurdless of overall market conditions.
The key question is: how strong will the demand be? The level of demand increase will likely be tied to two critical factors—mortgage interest rates and home prices with mortgage rates being the largest factor.
Interest rates remain one of the biggest influences on buyer behavior. If rates stabilize or decrease, we could see a surge in buyers taking advantage of improved affordability. However, if rates remain high or rise further, demand may stay relatively subdued although still should adjust for seasonality.
Similarly, home prices will play a significant role. If sellers continue to adjust pricing in response to the current market dynamics, we could see an increase in motivated buyers entering the market. On the other hand, if sellers hold out for unrealistic prices, many buyers may remain on the sidelines, waiting for more favorable conditions. Large reductions overall in price are not expected however as seasonility should produce enough demand to hold prices up over the next few months.
The Central Florida real estate market is transitioning from the extreme seller’s market of recent years into a more balanced—or even buyer-friendly—environment. With inventory at decade-high levels, price reductions becoming more common, and a slowing sales pace, the dynamics have changed. However, the upcoming spring season could bring a boost in activity, particularly if mortgage rates tend to shift.
If you’re thinking about buying or selling in Central Florida, now is the time to strategize. Let’s connect to discuss your goals and how to navigate this evolving market successfully.
***All above charts are data pulled directly from Stellar MLS which covers most of Central Florida.
