A variety of different outside factors can influence residential real estate transactions in Florida, as they can anywhere. Crime rates and local school performance can influence what buyers want to pay for a property and how much demand there is in a particular area. The time of year also influences how many buyers are looking to acquire property and move in the near future.
Financial and economic matters often play a significant role in residential real estate transactions. For example, interest rates can inspire people to finance, buy or sell their homes. They can also deter people from entering the real estate market in some cases.
What impact have rising interest rates in the last few years had on the Florida real estate market?
Rates have deterred some buyers
In an effort to combat inflation, the Federal Reserve made multiple strategic increases to the prime rate, which trickled down to influence the average mortgage rate for new loans. For a while, mortgages covered at the highest rates they had seen in decades, but that trend has begun to reverse.
In the second quarter of 2024, mortgages may have an interest rate of around 7% when buyers have excellent credit. Future adjustments could see that increase or decrease depending on inflation and other economic factors. Currently, financial analysts predict that rates may continue to fall over the next few quarters.
After years of historically low rates, some buyers let that jump in interest rates deter them from seeking a mortgage. However, that did not necessarily cool off the Florida real estate market very much. Demand remains relatively steady, while supply remains somewhat low. Some communities have seen a moderate drop in prices and demand and a noticeable but overall minor increase in how long properties remain on the market.
Both buyers and sellers may need to consider broader economic factors as they prepare for residential real estate transactions. Sellers may need to be a bit more flexible regarding their expectations when interest rates are higher, while buyers may need to be more cautious about what offers they make on properties.
Tracking factors that can influence residential real estate transactions can benefit those hoping to acquire or sell real property in the next few years. Interest rates are one of many factors that can have a powerful influence on one’s approach to buying or selling a home.