Florida Housing Market Forecast For 2021

Set of Florida modern luxury houses in a residential neighborhood area.

It’s never been a trickier time to navigate the Florida real estate market. 

Housing prices in cities like Tampa and Miami jumped more than 10% year-over-year in January according to an S&P 20-City Composite, continuing a stampede of yearly price gains that looks eerily similar to the 2007 housing crisis. 

Despite the rise in prices, competition is still at an all-time high in Florida. Inventory is drying up, Gen-Z’ers are coming of age, and COVID-19 is turning would-be renters into first-time home buyers. The post-pandemic boom seems to be marching on – but for how long? 

If you’re wondering when to buy or sell your home this year, our Florida housing forecast for 2021 can help you understand emerging market trends impacting the world of real estate. 

Read our comprehensive report below:

State of the Boomin’: What’s Going On in Florida Real Estate Right Now?

The Florida real estate market in 2021 can be summed up in one word: Growth. 

Not only are property values rising – the growth rate at which they rise each year is accelerating too. The S&P Global (who supplied the chart above) compares current price growth to the winter months preceding the housing market crash in 2008.

Not a good look.

Why Are Home Prices So High?

Inventory is at a record low, with the supply of single-family homes in Florida down 56% at the end of February according to Dr. Brad O’Connors, Chief Economist at Florida Realtors.

New home builders aren’t playing catch-up either. January and February posted consecutive declines in applications from builders for new home construction projects, a supply problem that may persist until the second half of 2021 or even next year.

Fewer homes for sale means higher prices and more pressure on prospective buyers to close the deal. Buyer FOMO (“Fear Of Missing Out”) is hitting hard, leading to a unique dynamic where property sales are growing even as the median price skyrockets. 

For example, 2021 Florida Realtors President Cheryl Lambert says new Florida home sales are up 11% for single-family homes and 35.4% for condo-townhome units. 

Yet the median price for single-family homes and condos in Florida have also jumped over 15% compared to this time last year, up to $314,900 and $221,000 respectively.

Talk about a seller’s market! But we haven’t even scratched the surface.

Millennials Dominate, Gen-Z Enters the Ring

On top of skyrocketing sales and prices, the demographics of home buyers are also changing.

Millennials are beginning to drive the market, making up the largest share of home buyers this year (37%) according to a 2021 NAR study. 

Fueled by transitions to remote workplaces during the pandemic, younger middle-class workers from high-rent cities are seeing suburbs and other less competitive areas in a more attractive light.

This could have unexpected effects on housing in Florida. Will new hot spots spring up as remote workers flock to suburban and rural areas? How will this population growth affect property values in those areas? Time will tell.


Even older Gen-Zers are starting to enter the real estate market. Their levels of home-ownership are much lower compared to Millennials (only 2% of all property owners are Gen-Z), but that balance is expected to shift over the next few years. 

A survey by Homes.com found that Gen-Zers are expected to buy more homes (and at a younger age) than Millennials. 


85.6% of Gen-Zers plan to buy a home, compared to the national average of 64%.


That may sound like a lofty goal for a generation that wasn’t old enough to experience the 2008 housing crisis firsthand, but optimism is in vogue right now when it comes to real estate. 


In fact, optimism is probably the most important factor when it comes to rising home prices this year, both in Florida and across the country.

Post-Pandemic Optimism Sparks New Interest in Homeownership


Nothing is motivating new home buyers more than hope for the coming end of the pandemic. 


With fresh doses of vaccines and stimulus coursing through the veins and wallets of Americans everywhere, people are feeling a renewed optimism for 2021. 


Even though Florida tourism is a ways off from pre-pandemic levels, homebuyers are making a long-term bet that things will improve in the next few years.

Much of this will come down to how quickly vaccines can be distributed and adopted.

Data from Zillow’s 2021 Mover Report suggests 70% of Americans would be comfortable moving to a new home once vaccines are widespread. Until then, housing demand may not reach its fullest potential.

But even then, property demand is already astronomically high across all markets with no signs of abating anytime soon. Prices are soaring in response. It’s hard to see how any hitches in vaccines or tourism levels could stem that tide.

This is leading experts to wonder if current trends can continue, or if the market is due for a correction this year. 

What’s the Florida Real Estate Market Forecast for 2021?

It is notoriously difficult to predict real estate markets.

That’s because most of the time, the most powerful force shaping the future of real estate is people. And people are motivated to buy, sell, or hold on to their homes for all kinds of reasons – a lost job, sunnier weather, an empty nest. It doesn’t always come down to price.

That said, most economists agree that the current upward trend of Florida home prices and sales will continue this year. The question is – for how long? 

And what will happen when home prices inevitably correct?

Rising Rates Could Tank Sales

Low inventory and high prices are creating a sticky situation for the 2021 housing market, but mortgage lenders Fannie Mae and Freddie Mac consider that a secondary threat when it comes to home sales.

The true black horse for home sales, according to Freddie Mac Chief Economist Sam Khater, comes in the form of rising mortgage rates:

“As the economy continues to improve, we expect conditions to remain generally favorable for the housing and mortgage market. Higher mortgage rates have the potential, however, to dampen the robust demand we’ve been experiencing, and we therefore forecast total originations to decline to $3.5 trillion in 2021.”

Mortgage origination is the process of completing a mortgage transaction resulting in a loan. 

The more originations out there, the more home sales are happening. 

So, Freddie Mac is predicting originations will drop by about a trillion dollars this year. That’s pretty substantial. Originations were $4.5 trillion in 2020.

The culprit? 

Mortgage rates, which are predicted to rise from their historical lows in 2021 to around 3.5%. As these rates continue to rise, housing affordability will become even worse for most buyers, forcing home prices (and sales) down as demand begins to ebb. 

Why are mortgage rates predicted to rise?

Remember how we said optimism is driving prices up because people really want to buy houses?

Well, optimism can also drive prices down because of its effects on mortgage rates.

Unless you’re a real-estate guru, you may not know that economic forecasts and mortgage rates are “tidally locked.”

What that means in caveman terms:

Economy good, mortgage go up.

Economy bad, mortgage go down.

At least, that’s how it works most of the time. 

Back when the pandemic first broke out, people were scared into a more risk-averse approach. Unemployment spiked, businesses shut down, and people took money out of stocks and bonds and kept them in their savings accounts. 

This sent rates plummeting to historical lows, and for much longer than anyone expected. 

More than a year later, things are changing. Forecasts are looking up, people are investing again, and optimism is high. As a result, mortgage rates will probably be inching back to normal levels. 

If they do, demand might slump just long enough for new home construction to catch up and flood the market with fresh inventory.

But that’s not a guarantee.

Could The Housing Market Take A Turn For The Worse?

Everyone’s always making predictions about the real estate market, but it’s important not to take them as gospel. Could mortgage rates rise and curb housing demand enough to drop property values to a more affordable rate? Possibly.

But that assumes the economy will continue to recover at a consistent pace.

People may be optimistic, but there are still plenty of obstacles to cross before things start returning to normal. 

Unemployment is still 2 points above pre-pandemic levels, vaccines are far from wide adoption in the U.S. with only 27% fully vaccinated according to recent data, and the CARES Act eviction and unemployment protections expired in March.

On top of that, much of Florida’s property values depend on tourism and local business. And with tourism levels still far below where they should be, it’s difficult to say how the state economy will handle the coming months and years.

All of these factors and more could keep the U.S. economy from expanding fast enough to sustain the growth in housing prices, leading to a Double-Dip Recession.

This is the ultimate question for 2021’s housing situation. Can the economy keep pace with property price growth, or will pandemic-related issues get in the way? And what would happen if they do?

Nobody can say for sure. For now, the market forecast is all boom.