A homeowner in Cape Coral, Florida, who closed on a house in 2022 has likely lost a significant chunk of equity since then. Based on the metro’s 9.1% price decline and a median purchase price that hovered near $350,000 during the pandemic boom, that loss could easily exceed $30,000. Meanwhile, a buyer who closed the same year in Allentown, Pennsylvania, has watched their home’s value climb steadily in the opposite direction. Those two realities now coexist in the same national housing market, and the gap between them is the widest in more than a decade.
U.S. home prices rose just 1.1% year over year as of January 2026, according to the Federal Housing Finance Agency’s monthly House Price Index. That is the weakest annual gain since 2012, when the market was still recovering from the foreclosure crisis. But the national number masks a dramatic regional split: Florida posted outright declines, while parts of Pennsylvania and New Jersey surged by close to 9%.
The Sun Belt unwind
Florida statewide saw prices fall 2.7% in the fourth quarter of 2025, according to the FHFA’s quarterly report. Cape Coral-Fort Myers, a metro that attracted waves of remote workers and retirees during 2021 and 2022, recorded the steepest decline among all tracked areas: a 9.1% drop. For owners who purchased near the peak, that kind of loss can push a home underwater, meaning the mortgage balance exceeds the property’s current market value.
Several forces are compounding the damage. New construction permitted during the boom years has been delivering units into a market where demand has cooled considerably. Florida’s homeowners insurance crisis has added thousands of dollars a year to carrying costs. The Insurance Information Institute has reported that average annual premiums in Florida run roughly two to three times the national average, depending on the coverage level and county. Property taxes tied to inflated 2022 and 2023 assessments have not fully adjusted downward either, squeezing household budgets from multiple directions at once…