Market Update & Predictions: A Closer Look at Florida Keys Real Estate Trends

The real estate market in Key West & The Lower Keys areas has seen a mix of trends in 2025. While prices are still climbing, buyer demand has started to show signs of slowing down. Let’s break it down by area.

Market Outlook for the Rest of Q3

Here we go into the last month of Q3 and what I consider to be one of the best times for a buyer in the last 5 years. Markets like predictability and the first part of 2025 has been anything but predictable which has in turn resulted in buyer hesitancy.

This hesitancy has caused buyers to pause and that pause has resulted in more inventory, longer days on market, and sellers willing to negotiate, pay closing costs, and be much more amenable to making a deal than in months past. If you're in The Keys we have downpayment assistance programs available for First Time Homebuyers where qualified borrowers can receive up to $90,000 in closing cost assistance.

There has been talk of a possible rate reduction at the next Fed meeting in September however the markets have already started to anticipate this and we are starting to see rate reductions in anticipation of the official announcement.

Let me repeat, if you are a home buyer, NOW is your time. Not next month, not next year, NOW.

33040 Market Trends

In 33040, the market has seen more ups and downs, with inventory rising but buyer interest cooling.

• Prices: The average list price decreased slightly from $1.98M in June to $1.97M in July. Median sale prices showed some resilience, rising to $930K in July.

• Inventory & Activity: Active listings grew, but pending sales fell sharply from 149 in June to 108 in July, reflecting a slow summer.

• Market Speed: Homes are taking longer to sell, with average days on market rising to 120.

Sellers in this area may need to adjust their pricing strategies as buyers become more cautious and take longer to commit.

33042 Market Overview

In 33042, we saw a mix of rising prices and faster sales, especially for higher-priced homes.

• Prices: The average list price continued to climb, reaching $2.1M in July 2025. Median sale prices recovered in July, rising to $1.05M from $970K in June.

• Inventory & Activity: Active listings remained stable, and while pending sales peaked in June, they eased in July, indicating a seasonal slowdown.

• Market Speed: Homes sold faster than in 2024, with average days on market dropping to 84.

Despite some seasonal shifts, demand remains strong in this area, particularly for higher-priced homes.

Market Outlook for the Rest of 2025

As we move into the second half of the year, expect a more balanced market. While prices have generally been constant, cooling buyer demand in some areas might give buyers more negotiating power.

• For Buyers: With more inventory and slowing pending sales, buyers might find more options and better chances for negotiation, especially if prices stabilize or dip.

• For Sellers: Sellers should be prepared for longer market times. Adjusting expectations and being flexible on price may help move properties faster.

Overall, the 33043, 33040, and 33042 markets offer a mix of stability, increasing inventory, and changing buyer behavior. Both buyers and sellers should stay flexible as we head toward the end of 2025.