Unusual combination of conflicting real estate forces keeps Florida home values high, sales low

by | Dec 6, 2022

  • High interest rates are combining with high prices to stagnate the Florida real estate market
  • Florida’s major metro areas still dominate the national home price increase chart
  • But with fewer buyers, homeowners aren’t listing their homes for sale, softening the downward pressure on home values

High interest rates combined with still high home prices in most Florida markets have combined to stagnate real estate sales across the state. While historically high home prices might normally trigger some homeowners an opportunity to cash out at the peak, high interest rates are simultaneously putting a damper on buyers who get sticker shock when they see their projected monthly mortgage payment.

Market data from Jacksonville-based Black Knight, a real estate data analytics company, shows Florida still has four of the top five real estate markets in the nation in terms of annual growth of home prices in 2022: Miami, at 20.1% over last year, is first, followed by Tampa (17.3%), Orlando (16.6%), and then Jacksonville (14.5%).

Miami is also the 6th least affordable real estate market in the nation, which is calculated by comparing monthly mortgage payments with monthly household income. A home mortgage in Miami would consume approximately 51% of household income.

Normally, Black Knight says, all those factors might put significant downward pressure on the real estate market, causing home sellers to lower prices, but across the country, that isn’t happening. Homeowners are holding the line on home prices or just not putting their home up for sale in the first place, causing an inventory shortage for home buyers. New for-sale listings in October were 19% below 2017-2019 levels, marking the largest deficit in six years (excluding March and April 2020 data collected during the pandemic).

“In a world of interest rates 6.5% and higher, affordability remains perilously close to a 35-year low,” said Black Knight Data & Analytics President Ben Graboske. “Add in the effects of typical seasonality and one might expect a far steeper correction in prices than we have endured so far, but the never-ending inventory shortage has served to counterbalance these other factors.”

Across the country, some markets saw drops in home prices, but even that has halted in recent weeks. “Despite home price corrections continuing in many markets nationwide driven by tight affordability and higher rates, the pace of price declines has slowed measurably over the past two months,” Black Knight wrote in its monthly mortgage monitor report.

The report also cautioned that the national early-payment default (EPD) rate – which captures mortgages that have become delinquent within the first six months –– has risen among certain loans for much of the past year, and has now reached the highest level since 2009, excluding the months in the immediate wake of the 2020 coronavirus pandemic.


1 Comment

  1. dolphincritic

    This is all part of Biden’s plan to wreck the economy. He is allowing the Federal Reserve to feast on higher credit rates, which is obviously another payback to his far-left wealthy supporters. Under Trump the Fed claimed they wanted to raise interest rates to create a 2% inflation rate. Now, under Biden, they claim that an interest rate hike will reduce inflation! What a pack of liars.

    The Florida Housing market will survive because there are lots of people from all over the world with money! They all want to own property in Florida! Waterfront property has never had a loss in value in any 10-year analysis. Florida’s low tax rates and good weather make it a retiree haven. Refugees from those Progressive Democrat regions of the country have cash reserves from their house sales up north. They also get a raise when they no longer pay those outrageous Progressive state taxes. The last round of Hurricanes is going to shake up the housing market too. It may come as increased rental property or as is sales of demolished homes.
    There is a housing belt in Central Florida where new developments are attracting new residents and relocating Florida residents. These are mainly retirees because wages are low, which reflects a lower cost of living, as well. Florida is a great place for doctors to retire. Any doctor with a geriatric background can sell out up north and move to the golf course in Florida while still working.

    Nope, the Fed is trying to Harpoon our state but woke leftism is fueling mass migration to the FREE STATE of Florida. There is one bitter pill in all of this. Price point for real estate will probably come down to accommodate the cost of borrowing money. This will affect middle class buyers and first home buyers. You may see rural areas adjacent to metropolitan areas allow trailer courts to abound. Affordable housing is a must if Florida wants to maintain a labor force. Living wages must override minimum wages too. Maybe our legislators can audit the Fed and bring them under control.

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