Real estate agents in Florida are sounding the alarm about the Sunshine State’s ongoing housing market issues, as many now believe they are facing a “nightmare” scenario.
New data has indicated that many Florida homebuyers are canceling their deals to purchase homes at a new record rate, which has complicated the housing market in the state.
Housing Cancellations Soar
A new report from Redfin, a real estate brokerage, has revealed that home purchase agreement cancellations have soared at a new record rate.
According to this report, almost 56,000 agreements were canceled in just June alone in Florida. This was about 14.9% of all the homes that were under contract in June. It’s also the highest percentage ever recorded for the month.
Some Florida Cities Have Been Hit Hard
Some cities in Florida are seeing these record cancellations more than others. For example, Miami has seen a large amount of last-minute cancellations as homebuyers think twice about purchasing property in the area.
Redfin data has revealed that about 2,500 home purchases were canceled in Miami in June, which was about 17.6% of all the homes that were under contract in the city at the time.
A Nightmare Scenario
These situations have resulted in Florida real estate agents sounding the alarm. Rafael Corrales, a Miami Redfin Premier agent, further opened up about this.
“We’re seeing nightmare scenarios where deals are getting canceled at the last minute for the most minute reasons,” Corrales said.
Why Are Buyers Backing Out?
Agents have revealed that there are a variety of reasons why homebuyers may be backing out of buying a home that they previously wanted. However, one factor rises above all the rest: affordability.
Corrales explained, “Buyers often back out during the inspection period because they find something they don’t like, but affordability is really the underlying issue.”
Orlando Had the Highest Home Purchase Agreements Cancelled
Orlando is reported to have the most buyers backing out of a house sale last minute, at 20.8%.
Then it was Jacksonville (20.5%), Tampa (20.5%), Las Vegas (20.2%) and San Antonio (19.9%).
Surprise Expenses
Many potential homebuyers may not be considering the extra expenses that come with owning a home, such as taxes and HOA fees.
Corrales added, “I don’t want my buyers to be surprised by all of the expenses that come with owning a home in Florida, so I advise them to proactively research the hefty costs of insurance, property taxes and HOA fees, in addition to the cost of their mortgage payment.”
Florida Home Insurance Is High
One of Florida’s many issues regarding the housing market is the price of home insurance. This is partly due to the weather conditions in the Sunshine State, such as hurricanes, which cause premiums to rise.
As people who have lived in Florida their whole lives or who moved here hoping to find somewhere cheaper to live are being priced out of their own homes, this is forcing many residents to sleep elsewhere, either out of state or in their cars.
Investors Warn About Home Insurance
The home insurance crisis in Florida has become so bad that real estate investors warned people at the beginning of 2024 that home insurance prices would skyrocket.
Regardless of whether anyone decided to pay attention to them, the investors turned out to be correct.
Borrowing Costs Are High
Another issue is that potential buyers’ borrowing costs continue to remain high, which makes them want to reconsider buying a house in Florida.
However, the 30-year fixed mortgage rate remains steady at 6.7%, which might give potential buyers peace of mind.
Californians and New Yorkers Moving to Florida
Prior to home insurance and house prices skyrocketing, Florida was considered one of the cheaper places to live — so much so that Californians and New Yorkers flocked there.
The number of people choosing to move to Florida, which meant its population hit more than 23 million for the first time in history, also made the housing market more competitive.
Florida Cost of Living
For anyone considering moving to Florida or currently living there, it is always important to know the average cost of living in the state so that people know how much they can expect to spend in a regular month.
For a family of four living in Orlando, it costs an average of $4,180 a month without rent, whereas it costs $1,170 a month for a single person without rent.
How Much Do You Need to Earn to Live in Florida?
It’s also important to be aware of the average annual salary you will need to earn to live in Florida, whether you are a single person or a group of people combining their incomes.
On average, you would need to earn around $77,000 annually to be able to live in Florida. Any lower, and you will struggle in one way or another. However, this all depends on your area and how many people have to live off your income.
Miami Beach Is the Most Expensive Area
$77,000 is the lowest income you will need to live in Florida, and this is for Daytona Beach. However, the most expensive place to live in is Miami Beach.
The average home value there is $2.3 million, and the average mortgage payment is $13,836. This means that the average annual income needed to live in Miami Beach is over $377,000.
Florida’s Expensive Housing Market
However, Corrales explained that most people back out of buying a home because it has become too expensive. Owning a home in Florida has become unaffordable for many.
Housing prices have soared in the Sunshine State in the past few years. Adding other expenses, such as taxes, onto a property has further pushed out many potential homebuyers.
Florida Home Prices Continue to Skyrocket
Redfin data has previously revealed that the median sale price of a home in Florida was $442,525 in June of 2024. This is up about 0.9% from the previous month.
However, it’s also up 4% year over year. This median sale price is even higher than the peak seen in 2022 during the pandemic, which only rose to $410,000.
Why Florida Homes Keep Rising in Price
There are a variety of reasons why homes continue to soar in price in Florida. However, the ongoing housing crisis in the state hasn’t helped at all.
Simply, there aren’t enough homes to go around. There isn’t enough inventory for buyers. Though Florida is in a better position with its housing market than other states, it’s still struggling.
The Surfside Condo Collapse
Another issue people are having with buying and selling their homes in Florida is due to the Surfside condo collapse in 2021.
This brought new laws into the state, including that older condo buildings must maintain reserve funds and undergo structural inspections. Buyers also have to read through the HOA board meeting minutes, and some are hiring lawyers because sellers refuse to share the necessary information.
Loan-Assistance Programs
Due to the income needed to live in Florida and the high house prices and mortgage rates, those on lower incomes are questioning how they can continue to live in or buy a house in the Sunshine State.
This is possible through various programs, such as loan and assistance programs given by housing finance agencies and mortgage lenders, to make homeownership more affordable.
Some Florida House Prices Are Coming Down
While some house prices seem to be skyrocketing throughout Florida, there are other areas where house prices are slowly dropping.
This is mainly in the Sun Belt due to supply outpacing demand, which is also happening in Texas.
A Shift in Housing Market Dynamics
The fact that there is evidence of house prices going down in the Sun Belt suggests that there might be a significant shift in housing market dynamics in the future.
It is predicted that some house prices along this strip could fall by as much as 15%, which would then cause a whole different kind of nightmare.
Americans Are Flocking to Florida
Over the past few years, many Americans have flocked to Florida, choosing to find a home in the Sunshine State for a more affordable price. This has resulted in the state’s population growing and hitting a new milestone.
However, with more people now living in the state, more homes are also needed. Since there aren’t enough homes in some areas, this low demand has caused home prices to skyrocket.
Florida Is Building New Homes
Florida has been quickly building new homes throughout the state to deal with this shortage. It’s one of the only states in the country that has been building the most homes in the past few years.
However, this hasn’t seemed to help the housing market in the state yet. Experts have claimed that buyers still feel they don’t have enough options — and that homes are too expensive.
Buyers Aren’t Purchasing Homes
Because of all of these factors, homebuyers aren’t purchasing homes, even though many want to. It’s simply become too expensive for many.
This has resulted in a record rate of people canceling contracts to buy a home, as well as forcing homes to stay on the market for a long time, making them “stale” listings.
