Chaos in Florida. Delinquent sales spike 400%.

Florida is now experiencing one of the biggest housing market downturns in America, and Cape Coral is at the center of it. Home prices are falling, housing inventory and supply are surging, home builders are sitting on vacant new construction, and more homeowners are being forced to sell at huge losses.

The Florida housing market boomed during the pandemic as migration surged, mortgage rates were historically low, and home builders raced to add new supply. Now that cycle has reversed. Mortgage rates around 7% have crushed housing affordability, migration into Florida has fallen dramatically, and home sales remain depressed. Whether you follow Zillow home values, Redfin home sales, housing inventory, mortgage data or new construction, the slowdown across much of Florida is becoming increasingly difficult to ignore.

In Cape Coral, home values are already down roughly 16% from their 2022 peak. But individual homeowners are taking even larger losses. I found short sales where sellers are losing $75,000, $100,000 and even $150,000+ after buying near the top of the housing bubble. In nearby Fort Myers, one condo purchased for $800,000 in 2023 is now listed for only $440,000.

At the same time, the supply side of the housing market is getting worse. Home builders are still adding new construction even as buyer demand remains weak. Driving through Cape Coral, I found vacant new homes, empty building lots, half-built houses, homes for rent and distressed properties all within the same neighborhoods. Some builders and real estate investors who financed construction with high-interest debt are now facing major losses as home prices decline.

The rental market is also weakening. Rents are being cut, landlords are offering incentives, and vacancies are rising as Florida’s massive pandemic-era housing expansion collides with lower demand.

In this video, I break down:

• Cape Coral home values falling roughly 16% from their 2022 peak
• Florida home prices declining across much of the state
• Mortgage rates near 7% and the affordability crisis facing buyers
• Short sales with $75,000 to $150,000+ losses
• A Fort Myers condo listed roughly $360,000 below its 2023 purchase price
• Florida migration collapsing from its pandemic peak
• Redfin-style home sales trends showing historically weak buyer demand
• Zillow-style home value trends showing major corrections in Southwest Florida
• Housing inventory and supply surging in Florida
• Home builders continuing to add new construction during the downturn
• Vacant homes, unfinished construction and distressed real estate investors
• Falling rents and rising housing vacancies
• Foreclosures and mortgage distress
• Why Austin, Punta Gorda, Cape Coral, Sarasota, Phoenix and other markets are seeing major housing corrections
• Florida’s proposed property tax changes and what they could mean for homeowners
• Our 2027 housing market and home-price forecast

The big question is whether Cape Coral is simply one of the first housing markets to experience this level of distress, or whether these conditions spread to other parts of America. If mortgage rates remain high, unemployment increases, the economy falls into recession or the stock market corrects, more housing markets could face the same combination of weak home sales, excess supply, falling home values and distressed sellers.