Florida’s housing market is currently facing two key challenges—homes for sale that are staying in the market longer and buyers showing reluctance to enter a market that is hampered by high mortgage rates, expensive home insurance costs and elevated prices.
Those challenges were illustrated by existing home sales data released on Friday that showed single family homes sales in Florida were down 0.5 percent from a year ago, while condos and townhouses saw a decline of nearly 9 percent, according to data from Florida Realtors, as the number of listings and prices shot up.
The median sale price of a previously owned property was up 1.6 percent from a year ago to nearly $427,000 as listings spiked by more than 15 percent. Townhouses and condos saw prices jump 1.5 percent compared to last year to $330,000 with an increase in those listings of close to 14 percent. These dynamics are coming at a time when mortgage rates have hovered around 7 percent even though there were signs of deceleration in recent weeks.
“While sales growth remains sluggish, with new listings still climbing compared to a year ago, inventory levels are still rising at the statewide level,” Florida Realtors Chief Economist Brad O’Connor said in a statement.
Holden Lewis, a home and mortgage expert at NerdWallet, said that the elevated costs of insurance coverage is contributing to stifling home sales in the state.
“Home insurance has become so expensive in Florida…that homeowners are having trouble affording the higher premiums,” he told Newsweek. “A lot of owners are listing their homes for sale so they can buy or rent a place that’s affordable, which is why inventories are rising.
“Meanwhile, buyers are cautious as they factor insurance costs into their home purchase decisions,” he added.
Housing economists have suggested that elevated homeowners coverage could be depressing the existing homes market in Florida.
Florida cities have some of the highest growth of active listings in the country, which are homes put on the market by their owners, according to Realtor.com chief economist Danielle Hale. Tampa ranked No. 1 in those listings while Orlando was No. 3 and Jacksonville came in at No. 5, according to Hale.
Hale said that part of the reason for the high number of listings is homes sitting on the market longer.
“There are signs that homes are sitting longer at the same time, we do still see a pretty sizable increase in new sellers in those markets,” she told Newsweek. “So, homes are sitting a little bit longer. That hasn’t yet stopped homeowners from listing.”
In addition to high insurance costs, Florida also has a relatively higher population of retirees who are likely to be owning their homes outright and may be willing to wait on the market a while longer.
“Those are the types of homeowners who are not impacted by mortgage rate trends,” Hale said. “You can think of them as somewhat unencumbered in today’s housing market because they don’t have to consider that.”
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