What Will Happen to Florida Real Estate if Rates Drop and Homestead Property Taxes Are Reduced or Eliminated?

By Sun National Title | August 2025

Florida’s real estate market has typically been a national standout for years, driven by favorable weather, no state income tax, and strong demand from out-of-state buyers and retirees. With the current inflation related problems, the market has shifted.

But what would happen if two major changes occurred simultaneously: a drop in interest rates and the elimination or reduction of Homestead Property Taxes?

Let’s break down how these two shifts could transform Florida real estate—and what buyers, sellers, investors, and agents need to prepare for.

📉 The Impact of Falling Interest Rates on Florida Real Estate

After a prolonged period of elevated interest rates to combat inflation, many economists and market watchers are forecasting a gradual easing by the Federal Reserve. If rates drop significantly in the next 12 to 24 months, here’s what Florida could experience:

1. Increased Buyer Activity

Lower mortgage rates improve affordability. For every 1% drop in mortgage rates, buyers can often afford 10% more home—a major incentive in high-demand markets like Cape Coral, Fort Myers, and The Islands. Expect:

• A wave of first-time homebuyers re-entering the market

• More competition for mid-range properties

• Faster turnaround on listings

2. Rising Home Prices

Increased demand without a matching rise in supply usually leads to price increases. With more buyers qualifying for mortgages, we may see bidding wars resume—especially in desirable, low-inventory neighborhoods.

3. Refinancing Boom

Homeowners who bought during high-rate periods will look to refinance, unlocking equity for renovations, investment properties, or second homes. This could further fuel economic activity across Florida’s real estate ecosystem.

🏠 What Happens if Florida Eliminates or Reduces Homestead Property Taxes?

The Homestead Exemption in Florida currently provides property tax relief to permanent residents, including up to a $50,000 exemption on a primary residence and a 3% cap on annual assessment increases (Save Our Homes).

The $50,000 Exemption was great in 2006 when the average property value was in the $200,000 range. In today's market it doesn't offer the same relief.

Governor DeSantis has proposed several ideas to fix this problem for Florida residents.

One proposal was to raise the exemption to $500,000 this would actually help the people who need it most, while leaving room on the table for municipalities to still generate funding.

If Florida were to eliminate Homestead Property Taxes altogether, the effects would be far-reaching.

1. Huge Spike in Demand for Primary Residences

Florida is already a magnet for retirees and tax-conscious relocators. If Homestead Property Taxes disappear, owning a primary residence in Florida becomes even more attractive, especially for:

• Retirees looking to reduce fixed expenses

• High-net-worth individuals seeking tax havens

• Out-of-state residents moving to Florida full-time

2. Shift in Buyer Behavior

Currently, many investors and second-home buyers drive up prices in resort markets like Cape Coral, Naples, and Fort Myers. Eliminating Homestead Property Taxes might tip the scales in favor of owner-occupants, potentially balancing the investor-owner mix.

3. Possible Increase in Home Prices and Land Value

With the cost of holding a primary residence lowered, buyers may be willing to spend more upfront. This increased willingness could push values even higher—especially in markets with limited land or development capacity.

🧭 Navigating These Changes: What You Should Do Now

At Sun National Title, we keep our finger on the pulse of the market so our clients stay ahead of the curve. Whether you’re buying, selling, or investing, here’s how to prepare:

• Buyers: Get pre-approved and lock in rates early. If rates fall, you’ll be in a strong position to act fast.

• Sellers: Position your home now to take advantage of increased buyer interest as rates drop.

• Investors: Monitor policy changes closely. A tax-shift could alter the ROI on rental properties and vacation homes.

• Agents: Educate your clients about how economic and legislative shifts could create opportunities—or risks.

📍 Conclusion: A Perfect Storm for Growth?

If interest rates drop and Florida eliminates Homestead Property Taxes, we may see one of the most explosive real estate booms in recent memory. But rapid growth also brings challenges: affordability, infrastructure strain, and competition.

At Sun National Title, we’re committed to helping you navigate this evolving landscape with expert guidance, smooth closings, and local market insight. Whether you’re making your first purchase or expanding your real estate portfolio, trust us to help you close with confidence.

Sun National Title Your Trusted Title Partner in Florida Real Estate Closings 239-334-3321