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ORLANDO, Fla. – There’s no doubt: Today’s real estate market bears little resemblance to the one from 2021-2022.

High sales prices plus high interest rates have helped shrink the depth of the buyer pool. Sellers are reluctant to list if they feel they can’t achieve peak pricing – plus the idea of then becoming a buyer again is enough to keep them where they are.

In times like this, emotions run high. That’s why data is even more important when working with clients who want or need to be in the market but have a lot of reservations about doing so.

Bearish buyers

A first-time homebuyer is entering an unusually difficult market. Typically, first-time buyers are currently renters, and their ability to save for a down payment has been hampered over the last few years by rapid rent increases, soaring inflation and rising interest rates. Depending on the market, rents have increased upwards of 30% throughout Florida from 2020-2022.

A larger monthly rent payment eats into their household budget and takes a bigger bite every time their lease renews. Inflation increases how much the same amount of stuff costs each month, causing them to decrease the amount they can save just to make up for the extra expenses. Finally, rising interest rates cause the cost of any debt to increase, including credit cards and car loans. When these buyers sit with a lender to discuss pre-qualification, today’s rates further limit how much they can borrow while keeping their monthly payment within reason.

Pair this economic climate with where the housing market is, and well, there’s reason to understand their concern. While more houses are on the market now, there are also fewer buyers, which helps keep prices higher than they were two years ago. Prices only really fall when supply exceeds demand, and the market hasn’t seen the heap of supply needed for prices to drop off. Buyers are also still out there, albeit much less than before.

Skittish sellers

Repeat buyers have a slightly better set of circumstances, as they may benefit from a potentially large equity cash out from the sale of their current home. Prices have been softening, but they’re still near historic levels.

However, selling means two things. First, they have to buy something at today’s prices, which are higher than when they bought originally. Second, they have to buy at today’s rates. When rates were low, existing homeowners rushed to refinance to take advantage of interest rates between 2%-4%. Selling means leaving that historic rate behind. Still, that large chunk of equity may ease the sting if the property is right.

The result

Buyers are scared of buying at or near peak in terms of prices. They are also scared of how much interest they will pay. But more importantly, they’re scared of next year’s lease renewal.

Ease your clients’ concern by turning to data available exclusively to you as association member – Florida Realtors® SunStats.

Statistics can help you show clients what the market is doing and where they can still find value, which is key to addressing their concerns and helping them feel confident. It also helps more than your current transaction, but also later when the market improves.

Jennifer Warner is an economist and Florida Realtors’ Director of Economic Development

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