Home prices have shown no signs of slowing down for the first half of this year. However, we have already begun seeing buyer demand begin to dissipate as mortgage interest rates continue their climb. According to a recent National Association of REALTORS® report, pending home sales fell for the sixth consecutive month in April. Needless to say, as more buyers become priced out of the market due to higher mortgage interest rates, sellers are having to adjust their asking prices. In fact, higher mortgage rates have increased the cost of purchasing a home by more than 25% compared to last year. Add in home prices that are also 15% higher as compared to a year ago, and this creates a significant challenge for buyers. Lastly, a 40-year high in inflation is also providing significant headwinds for would-be home buyers.
More price reductions
For the past several years, price reductions for homes listed for sale were almost unheard of. Fast forward to mid-2022 and we are beginning to see price reductions becoming significantly more common. According to Ken Johnson, economist at Florida Atlantic University (FAU): “If we’re not at the peak of the current housing cycle, we’re awfully close.”
According to a recent study from FAU, 15 housing markets were identified to be overvalued by more than 50%. As for Florida cities identified as being overvalued by more than 50% in this report, they were as follows:
- #8. Fort Myers, FL (56.26% premium)
- #12. Lakeland, FL (53.22% premium)
- #13. Tampa, FL (52.41% premium)
For a full list of the most overpriced housing markets identified in this report, click here.
Summary
It has been quite apparent that real estate prices could not continue on the same upward trajectory of the past several years. With this said, most economists do not believe that we will see a significant correction or collapse in the housing market anytime soon. As always, it is important to monitor your local market for the latest trends. Although there may be some slightly overpriced markets throughout the country, it is expected that South Florida will not be impacted to the extent of other markets. The main reason for this is because of the continued population growth that we continue to see throughout South Florida. As more Americans opt to work remotely, we expect to see continued growth in the number of working-aged Americans migrating to paradise. In addition, South Florida will also continue to be a top destination for retirees looking to enjoy a slice of paradise. Do you have questions about the South Florida market? Contact Natasha today!
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!
