Florida's housing market is seeing 'nightmare scenarios' as buyers back out due to affordability concerns, Redfin says
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- Florida's housing market is seeing a wave of buyers get cold feet.
- In June, 21% of home purchase agreements fell through in Orlando, Jacksonville, and Tampa, Redfin found.
- Home prices, meanwhile, are dropping in the state as supply outpaces demand.
Florida's housing market is facing a wave of "nightmare scenarios," with a growing number of home deals falling through as buyers get cold feet.
In key metros like Orlando, Florida, and Tampa, around 21% of home-purchase agreements were cancelled in June, according to data from Redfin. Those cities have the highest pace of home-purchase cancellations in the nation, handily outpacing the national average of 15% last month, the real-estate-listings site said.
The trend appears to be driven by housing-affordability concerns across the nation, according to Rafael Corrales, a Redfin agent based in Miami.
"We're seeing nightmare scenarios where deals are getting cancelled at the least minute for the most minute reasons," Corrales said in a statement. "Buyers often back out during the inspection period because they find something they don't like, but affordability is really the underlying issue."
Home prices in the US rose another 4% in June, hitting a record high of $442,525, Redfin estimated. Last-minute back-outs may be particularly acute in Florida given that home prices in the Sunshine state have skyrocketed since the pandemic.
Borrowing costs also remain elevated, which has helped pushed buyers away from the market. The 30-year fixed mortgage rate remained steady at 6.7% last week, according to Freddie Mac.
Poor affordability conditions appear to be cooling down home prices and housing activity, particularly in the Sun Belt. In states like Florida and Texas, home prices are dropping at a rapid clip as supply outpaces demand, Redfin said in a previous report. In Florida, inventory has climbed as much as 50% compared to levels last year, it added.
The real estate correction could ripple across the Sun Belt, where home prices have been on the rise since the pandemic, some real estate experts say. According to Nick Gerli, the CEO of Reventure App, prices in the region could fall as much as 15%, with many units already overvalued.