Florida housing market: what first-time home buyers should know

One of the entrances to the Coral Gables neighborhood in South Florida. (Photo Courtesy of Wiki Commons)

When the pandemic hit in early 2020 the Florida housing market was subjected to rising property values, this was a boon for many homeowners in Florida as they saw their equity quickly rise. 

Per Florida Realtors, the largest trade association in the state, the average sale price for a single-family home in Florida was $486,101 in September 2021. In May 2022 the average sales price jumped $116,457, to $602,558.

Then inflation and rising interest rates started to take a toll on the Florida housing market. Between June 2022 and September 2022 the average sale price fell by $62,481. 

Interest rates continue to climb, they went from record lows in 2020 and 2021 which were hovering around 3% for 30-year mortgages, and are now over 7%.

Doug Leever, who is the current president of the Mortgage Banker Association of Florida, said, “people who are looking for a $500,000 home are now looking at the $300,000 home”, due to the rise in rates.

But that is not the only issue the Florida market is experiencing, homeowners insurance which plays a part in qualifying for a home loan is also climbing. 

“I believe in Florida, we’re about three times the national average, on homeowners insurance here. Premiums have been going up year after year”, said Leever

Lenders use PITI (principal, interest, taxes, and insurance) to find out how large of a loan someone can be qualified for. Other expenses like credit card debt or a car note may also affect the amount someone may qualify for. 

Leever says while the market may not look too great at the moment it does not mean it is impossible to purchase a home. Programs exist to make first-time home buyers have an easier time making a purchase. 

“There are first-time homebuyer programs, for instance, where you can get into a home with only 3% down. So if you’re buying a $400,000 house, it’s only $12,000 Plus closing costs to get into that home”, said Leever.

He recommends talking to a lender about these programs as they may be more familiar to what would work best for your specific scenario. 

And if you’re still unable to qualify for a home loan there are many aspects you can improve so you can qualify on your next attempt. 

“If you can’t get prequalified, they need to work on their credit, you need to work on your savings, you know, whatever it might be, pay off some debt so that your debt to income ratio is better with the higher interest rates”, said Leever.

Alex Vargas is a digital journalism major at Florida International University. He enjoys watching sports and reading about the latest news. He makes a valiant effort to provide the best coverage of a story.