Florida’s Amendment 3 Expected to Boost Housing Market Activity

Florida's housing market is poised for a significant shift following the approval of Amendment 3, which passed with 62% of the vote, exceeding the required 60% threshold. This amendment increases the homestead exemption for property taxes, allowing homeowners to exempt up to $150,000 of their property's value in 2027 and up to $250,000 in 2028. This change is expected to create a "sugar high" in the market as homeowners rush to establish their primary residency before the December 31, 2026 deadline to qualify for the new exemptions.

What happened

The amendment raises the homestead exemption from $50,000 to $150,000 in 2027 and $250,000 in 2028 for non-school property taxes. For example, a homeowner with a primary residence assessed at $350,000 would only pay taxes on $100,000 of that value in 2028, assuming they qualify for the full exemption. This could lead to substantial savings for many homeowners, making Florida an even more attractive place to live.

Real estate professionals, such as Jason Haber from Compass, believe that this change will prompt many potential buyers to act quickly, especially those who were already considering a move to Florida. The urgency created by the residency deadline may lead to increased competition in the housing market, particularly in areas like Boca Raton, where demand is already high.

Why it matters

• Tax Savings for Homeowners: The increased homestead exemption provides significant tax relief, potentially saving homeowners thousands of dollars, which could enhance affordability in a market where cost of living is a major concern.
• Increased Market Activity: The need to establish residency by the deadline may lead to a surge in home purchases, particularly in desirable areas, as buyers rush to secure the benefits of the exemption.
• Stability for Renters: The amendment also lowers the cap on assessed value increases for non-homestead properties from 10% to 5%, which could help stabilize rental prices and provide more predictability for renters and property owners alike.

Context and caveats

While the amendment is expected to boost the housing market, there are caveats. Homeowners must establish their primary residency in Florida by the end of 2026 to qualify for the new exemptions. If they miss this deadline, they will have to wait five years to benefit from the increased exemptions. Additionally, some experts caution that despite the potential tax savings, many homeowners may be reluctant to sell their current properties, especially if they have low mortgage rates locked in. Furthermore, property taxes in Florida reset upon sale, meaning any increase in property values could lead to higher taxes, potentially offsetting some of the benefits of the exemption.

What to watch next

As the deadline approaches, it will be important to monitor the influx of new residents to Florida and how this impacts local housing markets. Observers should also keep an eye on how current homeowners respond to the tax changes, particularly in terms of upgrading or downsizing their properties. Additionally, the potential for legislative changes regarding millage rates could affect the overall affordability landscape in Florida.