Has The Real Estate Collapse Begun? Florida Homes Decline Hits A 13-Year High

There’s been talk for many years of a real estate collapse to rival the crash of 2008. However, with Florida recently posting its biggest decline in house prices in 13 years, according to Bloomberg, that scenario seems closer than ever.

High interest rates, high insurance costs, oversupply, and low demand have caused the Sunshine State to contain over half of the U.S. metros with the most price cuts. According to Realtor.com, around one-third of the homes in North Port and Tampa had price cuts in April. They weren't the only places. Cape Coral saw cuts of more than 28%, and Jacksonville had over 27.5% of its homes drop their prices.

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Condos Are Driving The Decline

“The condos drive a lot of it, but it seems that the single-family market is also weakening,” Redfin RDFN Senior Economist Sheharyar Bokhari told Bloomberg. “The pandemic rush to Florida is dying down, and with mortgage rates being so high and staying high, it makes it really unaffordable for people paying for those high prices.”

The result has been the biggest Florida home price decline in 13 years, according to Bloomberg.

Home Listings Surge By 50%

The number of home listings surged by 50% from a year earlier in March in Cape Coral and North Port-Sarasota, according to Redfin data, The west coast of Florida has been hit particularly badly. Now, the East Coast is suffering too. Orlando has experienced a 0.9% sales decline and Jacksonville, a 2.2% drop.

“People used to move to Florida partly because they could get a deal. Now, people can’t afford to move here,” Bryan Carnaggio, a Redfin Premier agent in Florida, said in a statement. “The first questions from out-of-staters are, ‘How bad are the hurricanes? How high are insurance rates?'”

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Homeowners Association Fees Soar

According to U.S. Census data, Florida is home to about 20% of all U.S. condominiums, with around half being 30 years old, the University of Florida Bergstrom Center for Real Estate Studies shows. The partial collapse of condominium building in Surfside in 2021 killed 98 people, resulting in far more stringent building safety requirements, insurance costs, and condo reserve amounts to pay for upgrades. 

“If these buildings are subject to reserve requirements, buyers want to make sure they’re getting into a situation where the condos have their act together,” Brad O’Connor, chief economist at Florida Realtors, told The Wall Street Journal. “Whether it’s the lenders or the buyers themselves, we’ve seen a slowdown in condo demands.”

According to Redfin, homeowners association fees have soared in many Florida cities, jumping 17.2% year over year during the three months ended July 31, the highest rise in 43 U.S. metropolitan areas Redfin analyzed. Other Floridian cities weren’t far behind, with fees increasing by 16.7% in Orlando and 16.2% in Fort Lauderdale.

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Relief Is In Sight

However, relief might be in sight for cash-strapped condo owners. On July 1, Gov. Ron DeSantis can sign, veto, or allow House Bill 913, which provides relief for condo owners battling rapidly increasing HOA fees. The bill is intended to help with costs without sacrificing safety, Realtor.com reports.

“This bill comes from a lot of listening to owners talk about how they know their building needs to be safe but pleading that the process be fair and workable,” Sen. Jennifer Bradley, who spearheaded the debate regarding increasing condo fees, said according to media reports. “With each milestone inspection, our condos are becoming safer, but financial impacts are reverberating.”

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