As we look ahead to the housing market in 2025, five metro areas across the U.S. are facing serious risks of a potential crash.
It’s no surprise that three of these areas are located in Florida, with two others in Arizona, both part of the Sun Belt region.
According to a recent study, Winter Haven, Tampa, and West Palm Beach are among the top five cities most likely to see home price declines in 2025.
Florida’s Housing Market Faces Decline in Demand
Florida has seen a significant drop in demand, contributing to the ongoing downturn in its housing market.
The state has been dealing with a rising number of residents leaving, combined with slower migration from other states since the pandemic.
Factors such as increasing home prices, high mortgage rates, soaring homeowners association (HOA) fees, and rising property insurance costs—driven by the growing frequency of natural disasters—are making it harder for potential buyers to enter the market.
Winter Haven, Tampa, and West Palm Beach are experiencing similar struggles, and the study suggests that further price declines are likely.
CoreLogic’s chief economist, Selma Hepp, noted, “While this year’s cold winter and large natural disasters play a role in dampening demand, falling consumer sentiment suggests potential homebuyers are wary of the short-term economic outlook and future inflation.”
Price Declines and Slow Sales in Florida Cities
Several cities in Florida have already seen noticeable declines in home sales.
Tampa, once a popular boomtown during the pandemic, experienced a 1.6% drop in sales from October 2024 to January 2025.
Similarly, Winter Haven and West Palm Beach both faced a 1.2% drop during the same period.
These cities, which attracted buyers for their appealing weather and remote work opportunities, are seeing the impact of rising costs and fewer buyers willing to purchase.
Could Lower Mortgage Rates Provide Relief?
Despite the overall slowdown, there is a glimmer of hope for the Florida housing market.
CoreLogic’s economists predict that lower mortgage rates could help encourage potential buyers to return to the market.
Hepp explained, “With the spring homebuying season upon us, the recent improvements in mortgage rates may help invite homebuyers back into the market.”
This could help boost sales, but the question remains whether it will be enough to turn the tide.
West Palm Beach Sees Positive Developments
West Palm Beach, in particular, might have a better chance of bouncing back.
This area, once considered the “wrong side of the tracks,” has seen a transformation with new luxury developments, high-end restaurants, and significant investments from financial and tech firms.
As the local economy grows, along with the area’s lifestyle appeal, West Palm Beach could see more home sales, driven by the influx of businesses and residents looking for a more upscale living environment.
National Housing Market Struggles With Inventory and Slow Sales
Across the nation, the housing market is also facing challenges, with many homes sitting on the market for longer than expected.
In December 2024, homes spent an average of 70 days on the market—nine days longer than the previous year—making it the slowest December in five years.
Florida cities like New Smyrna Beach, Palm Coast, Panama City, and Gainesville are struggling with high inventory levels, where many homes have been on the market for over 90 days.
Regional Housing Market Differences Across the U.S.
Meanwhile, a recent report highlights the growing disparity in housing markets across the country.
For instance, in Wyckoff, New Jersey, a modest ranch-style home listed for nearly $1 million received 25 offers and went under contract for $200,000 above its asking price.
In contrast, a much larger six-bedroom home in Miami, priced similarly, has struggled to attract any offers, prompting the sellers to lower the price.
As we look ahead to 2025, it’s clear that while some areas may see price growth, others, particularly in Florida and Arizona, will continue to face challenges in the housing market.