What a difference a year makes. Heck, what a difference even a half year makes. Last year at this time, homes were selling in record time and oftentimes well above asking price. In fact, it was commonplace for a new listing to hit the market with broker remarks stating that all offers were due by a certain date and time. (Typically, these offers were due in just a few days.) Furthermore, it was not uncommon to then have a bidding war for the property.
The current housing market is already substantially different though. Although we are still seeing many Americans opting to relocate to The Sunshine State, the coinciding home buying frenzy is not taking place. Why all of sudden has the buyer demand cooled off? The main reason is significantly higher mortgage interest rates. Instead of mortgage rates being in the 2-3% range, they are now in the 5-6% range. Needless to say, this is a significant difference and essentially has priced out many would-be home buyers. It is estimated that 18 million households have essentially been priced out of the market. For more on this, check out “Higher Mortgage Rates Leading To Less Buyers”.
June 2022 Florida home sale price drops
Throughout all the major Florida markets we are seeing the percentage of home sellers dropping their prices increase. For perspective, below we list the percent of home sale price drops as of June 2022 as compared to a year ago for these markets:
- Tampa: 44.5% (28.6% in June 2021)
- Cape Coral: 41.2% (21.5% in 2021)
- Jacksonville: 40.1% (15% in 2021)
- Lakeland: 36.8% (19.1% in 2021)
- Orlando: 34.7% (25.1% in 2021)
- West Palm Beach: 26.3% (11.4% in 2021)
- Fort Lauderdale: 20.9% (11.4% in 2021)
- Miami: 19.8% (9.7% in 2021)
Although higher mortgage rates are the biggest factor in the current housing market cooling off, there are certainly other market dynamics at play as well. For starters, home prices have risen dramatically over the past few years leading more would-be home buyers to be priced out. In addition, a 40-year high inflation rate and what many believe to be a recession in this country is also providing significant headwinds for the consumer. During difficult financial times such as this, it is common for households to restrict their spending while focusing on the bare essentials. For sellers, this is certainly an adjustment period. For many listing their homes for sale today, it is likely that they will need to adjust their expectations as they will probably not sell their home for the same price that their neighbor may have sold for just several months ago.
Are you looking to buy or sell property in South Florida? We can help. Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download our free Florida Home Search App for your mobile device today!