Astronomical Prices and Costly Mortgages Lower Florida Housing Affordability

Florida housing is already some of the most expensive real estate in the country, but increasing borrowing costs coupled with astronomical prices are knocking potential homebuyers out of the Florida housing market. A recent 13 percent drop in affordability is whittling away demand and cutting down bidding wars that “helped drive big price leaps in some areas.”

“Affordability is determined by monthly payments, including taxes and insurance.” Therefore, as mortgage rates increase, Florida housing becomes less affordable. A potential homebuyer who earns $100,000 and has saved up a $40,000 downpayment can afford to purchase a $421,000 home with a 30-year mortgage at a fixed-rate of 5 percent. “At a 6% mortgage, that falls to $390,000,” and at 7 percent, “the upper limit is only $362,500.”