Real estate crisis on the horizon in Florida as sales plummet: “Beginning to see the real pain in the condo market”
Florida – Florida’s real estate market used to be known for quick transactions and prices that went through the roof. Now, though, it’s slowing down as buyers, sellers, and industry experts struggle to figure out what’s going on. It looks like the days of crazy bidding wars and rising property values are over. The market is finally cooling down, but it’s not falling apart.
Since the COVID-19 pandemic, purchases of condos and homes around the state have slowed down a lot. During the pandemic, there was a rush to buy homes in Florida because low mortgage rates made it easier for both local buyers and people moving from other states to get into the market. But as interest rates and insurance costs have gone up, the demand that once seemed unstoppable has begun to diminish.
Juan Arias, who is in charge of market analytics at CoStar, believes that the effect has been especially strong in the condo market. Most Florida areas saw a double-digit drop in sales in April, while some areas and counties are seeing a sharp, 20+ percent drop in sales.
“I think we are beginning to see the real pain in the condo market right now,” Arias said.
There are a number of things that are making this slowdown happen. Because of rising mortgage and insurance rates, it is harder for purchasers to get into the market. Also, new reserve requirements for condo associations that were put in place following the catastrophic Surfside collapse have raised fees. These changes have made it hard for those who want to buy a home, and in some circumstances, owners have had to sell.
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Sales of single-family homes have also slowed down. Since February, the number of residences that have changed hands has gone down every month. In April, the median price dropped by 4%. Still, housing prices are more than 50% higher than they were in 2020, so this fall appears more like a correction than a crash. Affordability is still the biggest problem in the market, with a lot of purchasers either not being able to afford it or choosing to wait.
In Southwest Florida, Karen Moore, publisher of Southwest Florida Business Today, stresses that today’s slowdown isn’t a repeat of the 2006 housing crash.
“It’s a different set of factors,” she says, noting that hurricanes and lingering recovery from storms like Ian, along with insurance issues, have played a major role. Condos near the coast have been hit hardest and are expected to take the longest to recover.
Higher interest rates have had an effect on the Tampa Bay area since many buyers who locked in very cheap rates during the pandemic don’t want to move now. People used to say, “Buy because you can,” but now they say, “Buy only if you must.” Even after hurricanes, the projected wave of distressed sales hasn’t happened.
In Florida, rising insurance prices, higher mortgage rates, and more general economic uncertainty are making things harder, but the fundamentals are stronger than they were during prior downturns. Experts agree for now: things are slowing down, but there is no hint of a big crash coming.
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