The Pressure Valve For Step-Up Buyers

Ron Cardenas
Dec 7, 2025
4 min read

In Central Florida, the “step-up” market is basically caught in a financial squeeze—and that’s exactly why new construction has become the pressure valve for second-time buyers.

1. Where first-time and step-up prices sit now

Rough ballpark for today’s prices:

Tampa: Median sale price around $420K. Redfin
Polk County: Median sold price around $311K–315K; median listing about $335K. Realtor +1
Orlando / East Orlando: Orlando median sales around $415K–423K, with East Orlando listings around $335K. Realtor +2Redfin+2

So in practice:

First-time buyers are usually in the high-200s to mid-300s price band (starter resales, townhomes, smaller new builds).
Step-up buyers—folks selling their first home to get more space, better schools, or a nicer neighborhood—are often looking in the $400K–$600K range in these same metros.

In a 3% interest-rate world, that jump was painful but doable. At 6.5–7.5%, plus higher taxes and insurance, that same jump can feel like falling off a cliff.

“Why upgrade if I’m paying way more for only a little better?”

2. Why the 'step-up' market has cooled

a) “Golden handcuffs” from low old rates

A lot of current owners locked in 2.75–3.5% mortgages in 2020–2021. To step up, they’d trade that for a rate roughly double that today. Even if they have equity, the payment on a $450K–$550K move-up home is hundreds of dollars more per month than it would’ve been three years ago—so many just stay put.

b) Higher prices + lower inventory = bigger payment shock

Prices did cool slightly in some pockets (Polk County, FL has even seen small year-over-year declines), but overall values in Central Florida are still way above 2019 levels.Redfin+1

Inventory is up compared to the frenzy, but nice, family-friendly resales in good locations are still tight, so buyers don’t feel like they’re getting a “deal” for taking on a much bigger payment.

Result: step-up buyers think, “Why upgrade if I’m paying way more for only a little better?” and they delay.

c) Property taxes marching up

Even where millage rates dipped, assessed values jumped. Polk County’s 2024–25 budget, for example, shows ad valorem revenue up about 11.4% because of rising valuations, and local reporting notes that most tax bills are still increasing despite a small rate cut.

Polk County Government+1

Higher prices + higher assessed values = higher tax bills on the new home. That eats directly into monthly affordability and makes the move-up math uglier.

d) Insurance is the silent killer of affordability

Florida’s average homeowners insurance cost in 2024 was around $11,700+ per year and rising about 7% year-over-year, far above the national average. GreatFlorida Insurance

Some analyses show 8%+ premium hikes for many homeowners in 2025, even as the market “stabilizes” from the huge increases of prior years. Herald Tribune+1

Hurricanes like Ian plus reinsurance costs have made insurers cautious; carriers pull back, Citizens depopulates, and more people get pushed into expensive private policies.

HH Insurance+1

For a step-up buyer, that means:

Bigger house
Higher replacement cost
Higher premiums

…on top of a higher rate and higher taxes. The secondary market cools because the all-in monthly payment (PITI + HOA + CDD) explodes.

3. Why new construction has become the best workaround

Despite all that, new construction in Central Florida is quietly solving a lot of the pain points for step-up buyers, especially in Polk and the Tampa/Orlando suburban corridors where new starts are still strong. HBWeekly+1

a) Insurance: built to current codes

New builds:

Meet the latest wind, roof, and impact standards,
Often qualify for better wind-mitigation credits,
Typically see lower premiums per $100K of coverage than a 1980s or 1990s resale in the same area.

You’re not immune to Florida’s insurance mess, but you’re usually on the better side of it with a new roof, new systems, and hurricane-rated features.

b) Interest rate relief via builder incentives

Builders in Orlando, Tampa Bay, and across Florida are using serious incentives to move inventory:

Rate buydowns (often 1–3 points below market)
Closing-cost assistance and upgrade credits
Sometimes stacked with price reductions

Recent reports show new construction listings in Florida offering buydowns at roughly 4x the rate of resale listings, and specific Tampa/Orlando builders are advertising 4.99% fixed or 2/1 buydown structures on select homes.https://www.mihomes.com+3Axios+3apontegroup.com+3

For a step-up buyer, that can make a $450K new build feel like a $380K resale from a monthly payment standpoint.

c) Inventory, choice, and less “perfect house” pressure

With new construction, you’re not stuck waiting for the one perfect resale to hit the MLS:

Tons of floor plans (bigger lofts, flex rooms, multigenerational layouts, 3-car garages, etc.)
Spec / quick-move-in homes if you need to move fast
Future phases you can contract now and move into months later

That flexibility is ideal for a step-up buyer who needs to sell first but still wants to lock in a home and incentives now.

d) Timeline control: align sale of current home with new build

You can:

Get under contract on a new build with a longer completion date.
Use that runway to list and sell your current home strategically.
Negotiate post-occupancy or flexible close dates with both sides.

This dramatically lowers the “we have to find something in 30 days” stress that comes with buying a resale in a tight inventory market.

4. Trade-offs to keep in mind (and how to work around them)

New builds aren’t perfect, so it’s worth acknowledging the downsides:

Smaller lot sizes in many master-planned communities
Restrictive HOAs (parking, fences, rentals, exterior colors, etc.)
CDD fees attached to amenities like pools, clubhouses, and gated entries

The upside: if a buyer wants more land, less HOA, and fewer fees, there are also private/local builders:

Building on non-HOA or light-restriction lots
Sometimes selling off-market directly to buyers
Often able to offer deep discounts if you commit in an early phase or before vertical construction is complete (especially in high-growth areas of Polk and outer Orlando/Tampa suburbs). HBWeekly+1

5. The bottom line for 'step-up' buyers in Central Florida

When you combine:

Higher interest rates
Rising property taxes
Elevated homeowners insurance
And still-limited “good” resale inventory

…the traditional step-up resale market in Tampa, Polk County, and east Orlando has definitely cooled.

From a financial standpoint, though, Central Florida’s solution for step-up buyers is new builds—leveraging builder-paid rate buydowns, closing-cost help, better insurance dynamics, and flexible timelines to make that second home move actually pencil out.