TRANSITIONING REAL ESTATE MARKET

Mortgage rates are rising again and remain the biggest driver in today’s housing market. The 30-year rate is now around 6.4%–6.5%, having risen for several weeks due to inflation concerns and global tensions that have pushed up oil prices and bond yields. Mortgage applications have dropped about 5% as buyers pull back, leading to higher monthly payments, delayed purchases, and slowing spring momentum.

At the same time, price cuts are becoming more common, especially in previously hot states like Florida. About 1 in 5 homes in major metros have reduced their prices, with markets like Tampa and St. Petersburg seeing notable declines. The price per square foot is also falling for the first time in years, giving buyers more negotiating power while sellers adjust their expectations.

There are also signs of financial strain. Searches for “help with mortgage” have surged past 2008 levels, and FHA delinquencies have risen from about 7.5% in 2023 to roughly 11.5% recently. While not signaling a crash, it does point to growing pressure that could lead to more listings or distressed sales.

On a positive note, affordability is improving slightly. Wages are rising faster than home prices in about 64% of U.S. counties. Since early 2024, home prices have been up around 8% nationally, but income growth has outpaced that in many areas, helping restore purchasing power.

Overall, the market is shifting toward buyers. Higher rates and more inventory are cooling demand, homes are staying on the market longer, and price reductions are increasing, giving buyers more options and leverage.

Key forces at play:

• Rising rates (short-term negative)

• Softening prices (buyer advantage)

• Increasing incomes (long-term positive)

In Florida, these trends are more pronounced. Rising insurance, property taxes, and living costs, combined with slower migration, are pushing sellers to adapt. The market is recalibrating to what buyers can afford, giving buyers their strongest position in years.

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