Before we dive in: this post is market commentary and general education, not personalized investment, legal, or tax advice, and it's not a solicitation to buy or sell anything — including a house. Every situation is different, so if any of this hits close to home, let's talk about your specific picture before you act on it. https://go.oncehub.com/PrivadaPhone
Every good pool party ends the same way. Someone eventually looks down, notices the water level dropped four inches, and asks who forgot to top it off. Then someone else notices the pool guy hasn't been paid in three months. Then somebody finds out the guy who cannonballed off the diving board at 2pm doesn't actually know how to swim.
That's more or less where Florida and Arizona real estate is right now. The music is still playing. Nobody's called the cops yet. But the water level is dropping, and a few people are starting to look a little too comfortable treading water for my taste.
I have offices in both states, with clients all over the country, so I've had a front-row seat to this one. Since my day job is helping people plan for retirements that are impacted in part by home equity, I don't get the luxury of looking away.
Act 1: The Cannonball
You remember the party, don’t you? 2020 through 2022: mortgage rates near historic lows, remote work untethering millions of people from their commute, and a stampede toward Florida and Arizona that turned sleepy retirement towns into bidding-war battlegrounds. Cash offers over asking. Waived inspections. People buying houses in Cape Coral sight unseen from a laptop in Chicago.
It was, by a lot of measures, the biggest cannonball the Sunbelt housing market has ever done. And like every cannonball, it looked amazing for about four seconds and then everyone had to deal with the splash.
Act 2: The Water Level Drops
Nationally, this isn't a crash — at least not yet, and not everywhere. Existing home sales ran at a 4.09 million annual pace in June 2026, down from May but still up modestly year-over-year, and the median home price actually hit a record $440,600 that same month, according to National Association of Realtors data reported by Yahoo Finance. Inventory is loosening but still historically tight — NAR's chief economist has been pointing to roughly 1.2 million missing units of housing supply nationally. So: slower, choppier, more sensitive to every wiggle in mortgage rates. Not underwater. Yet.
Florida and Arizona are a different pool entirely. These two states rode the boom the hardest, which means they're absorbing the correction the hardest too. According to ResiClub's analysis of Florida metro data as of July 2026:
- Punta Gorda is down 24.5% from its 2022 peak — after having gained over 70% during the boom. It's the poster child for "what goes up."
- Cape Coral–Fort Myers is down 19.1%, a decline compounded by Hurricane Ian's lingering damage to insurance costs and buyer confidence.
- North Port–Sarasota–Bradenton is down 17%, Naples–Marco Island down 11.7%, and even Tampa–St. Petersburg is off 8.4%.
That same analysis notes individual Southwest Florida homes have shed $50,000, $75,000, even $100,000 in value since the top of the market. Those aren't spreadsheet numbers to the people living in them.
Arizona's version of this is less dramatic but still notable. Statewide, the median listing price dropped roughly $15,470 between Q1 2025 and Q1 2026, and more than $28,000 since Q1 2024, landing at a median of $472,826 — the sixth-largest price decline of any state in the country, per Phoenix New Times. Homes are also sitting on the market about ten days longer than the 2024 average. A Scottsdale agent quoted in that piece put it about as plainly as you can: prices "went up so much, it was kind of out of whack," and now it's correcting.
Act 3: Who's Underwater
This is where "underwater" stops being a pun. Nationally, foreclosure filings hit 227,548 properties in the first half of 2026 — up 21% from a year earlier and 28% higher than two years earlier, according to ATTOM data reported by HousingWire. Foreclosure starts rose 18% year-over-year, and bank repossessions (REOs) jumped 33%.
Florida currently has the highest foreclosure rate of any state, at roughly 1 in every 373 homes, with about 27,494 properties affected in the first half of 2026 alone. Rising property insurance premiums, higher property taxes, and stricter FHA loss-mitigation rules are cited as the main pressure points — not the reckless subprime lending that drove the last crisis, which matters, and I'll come back to it.
Now, a picture — and I want to be very clear this is a composite, not a real client, not anyone I actually know, just a stand-in for a pattern I've seen described a lot lately: a hypothetical couple buys a Cape Coral home in 2022 at the top of the market, insurance premiums triple after Hurricane Ian, property taxes climb, and two years later they owe more than the house is worth in a market where it's sat unsold for four months. That's not a rare or exotic scenario anymore. It's a fairly ordinary one, multiplied across a few hundred thousand households in these two states.
The Pool Guy Nobody Wants to Talk To
Here's where things get spicier — and where I want to hand you a healthy dose of skepticism along with the popcorn. A recurring argument in housing commentary, including from widely-followed YouTube channels like Reventure Consulting, is that the official foreclosure numbers understate the real problem — that banks and servicers are sitting on a bigger pile of distressed, not-yet-public "pre-foreclosure" inventory than the headline stats show.
There's a real phenomenon behind that argument, even if the "hidden conspiracy" framing oversells it. Banks generally don't rush to list repossessed homes — they release REO inventory gradually to avoid flooding a local market and tanking their own collateral value, which is just... rational self-interest, not a cover-up. And a meaningful chunk of early-stage distress genuinely isn't public yet: a homeowner who's missed a couple of payments but hasn't received a formal notice of default doesn't show up in county filings or ATTOM's data, simply because there's no public record to pull yet. Today's total foreclosure filings, by the way, are still roughly 87% below the 2010 crisis peak, per Amerisave's shadow-inventory data — so "elevated" and "hidden crisis" are two very different claims, and I'd encourage you to keep them separated whenever you see this argument made with more confidence than the data supports. I'd also gently note that Reventure and similar channels have their own vocal critics in the housing-data world who accuse them right back of cherry-picking — so take any single YouTube voice, mine included, with a grain of salt and a second source.
The 18-Year Pool Clock
Now for the part that'll either fascinate you or make you roll your eyes, possibly both: British economist Fred Harrison has spent decades arguing that property markets move in a repeating roughly 18-year cycle — about 14 years of climbing, followed by a 3-to-5-year bust — a pattern he traces back through multiple historical cycles, including the one that peaked in 2007. In a recent MoneyWeek interview, Harrison stated flatly that this cycle "will" peak in 2026.
Harrison himself admits the 18-year pattern is an observed regularity, not a fully explained mechanism — he's essentially saying "this has rhymed before" more than "here's the physics of why it must happen again." Cycle theories are seductive because they're simple, and simple stories are usually wrong about the timing even when they're right about the direction. Plenty of respected voices in real estate research (see BiggerPockets' rundown of the same theory) treat it as one interesting data point among many, not a forecast to bet your equity on.
Déjà Vu, But Make It 2008
I'd be doing you a disservice if I didn't put this slowdown next to the last one, because the contrast is actually the most useful part of this whole story.
Between 2007 and 2014, more than 500 U.S. banks failed, with combined assets approaching $959 billion, compared to an average of just over 4 failures a year in the decade before, according to Pew Research. Washington Mutual alone — still the largest bank failure in U.S. history — collapsed on September 25, 2008, and was sold off to JPMorgan Chase for $1.9 billion, a fraction of what it had been worth. Congress authorized $700 billion for TARP to keep the banking system standing. Nationally, home prices fell roughly 27% peak to trough, and millions of households went through foreclosure over the following several years.
Why did that happen? Mostly because banks had spent years writing loans to people who couldn't realistically repay them, packaging those loans into securities, and selling the risk around the financial system like a hot potato nobody wanted to be holding when the music stopped. When home values fell, an enormous share of that mortgage debt turned out to be worth far less than the banks' books assumed, and the losses cascaded through the whole system.
That is not what's happening today, and it's the single most important difference between then and now. Post-2010 lending rules require documented proof borrowers can actually repay their loans, banks are required to hold significantly more capital against losses, and today's foreclosure pressure — as the data above shows — is concentrated in specific pandemic-boom markets and tied to insurance and tax cost spikes, not systemic bad lending. That doesn't make it painless for the Florida and Arizona households living through it. It does mean it's a regional correction, not (so far, and I'm hedging that on purpose) a rerun of a systemic bank crisis.
So, Should You Drain Your Own Pool?
I genuinely don't know — and anyone who tells you they know with certainty either hasn't been paying attention or is trying to sell you something. I've been doing this long enough to have made a confident call or two that aged like milk left by the pool in August, so I'm not about to pretend I've got a crystal ball this time either.
What I do know is that home equity is often one of the largest assets on a retiree's or near-retiree's balance sheet, and a 15-25% regional price correction is exactly the kind of thing that should show up in a real financial plan — not as a headline you scroll past, but as a number that gets stress-tested against your actual retirement timeline, your insurance costs, and how much of your net worth is sitting in one zip code.
If you own property in Florida or Arizona, bought at the top, or are wondering whether now's the time to buy, sell, or just stop checking Zillow at 11pm, let's put real numbers behind it instead of vibes from a YouTube comment section. Grab time on my calendar and we'll look at your specific situation.
Sources: NAR/Yahoo Finance existing home sales, June 2026; ResiClub Florida price analysis, July 2026; Phoenix New Times, Arizona price data; HousingWire/ATTOM foreclosure report, H1 2026; Amerisave shadow inventory data, 2026; MoneyWeek, Fred Harrison interview; BiggerPockets, 18-year cycle explainer; Pew Research, historical bank failures.