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How Interest Rates are Impacting Florida Real Estate

Learn how current rates are affecting Florida housing demand and home prices

If you've started researching Florida real estate online and in the process of getting pre-qualified with your lender, you're likely keeping a close eye on interest rates and noticed that they peaked in October 2023 at 7.79% and now starting to pull back a bit, at 6.89%. As the Fed is now targeting rate cuts starting in late 2024 or early 2025, due to declining inflation, you may be wondering how this will affect Florida's real estate prices, and where they may go from here?

You may have heard that interest rates and home prices have an inverse relationship, meaning that when one goes up, the other goes down, but this is not necessarily the case. Interest rates typically rise when the economy heats up through expansion, employers are hiring and overall wages are going up. In a growing economy, people typically feel more secure and comfortable in taking out a mortgage versus an economy that may be slowing down or heading into a recession.

But our current interest rate environment is quite different from the historical norm. The Fed intentionally raised interest rates (10 consecutive times to be exact) to combat inflation during a slowing economy, all the while Florida home prices have remained near all-time highs. And now, as our economy is beginning to heat up again, the Fed is looking at implementing rate cuts in the year ahead. Any mention of rate cuts, which typically generates increased buyer demand, are likely to push home prices higher yet again.

The Effect of Higher Rates on Monthly Mortgage Payments

Now let's take a closer look to see exactly how monthly payments for Florida homeowners have been affected by the now higher interest rates and home prices. In the following table, for calendar year 2020 versus present day, we compared the median Florida home price for single family homes, the 30-year interest rate as well as the average monthly payment to see how much they have increased in such a short period of time. Calendar year 2020 was selected as the comparison year as this is before all the inflation and Fed hikes started to take effect. The result is that the median Florida home price has increased by 47%, the interest rate by 122% and the monthly payment by 127%.

Variable Year
2020
Year
2024
Median Florida Home Price $290,000 $426,600
30-Year Rate  3.10%   6.89% 
Monthly Payment  $990   $2,245 
  Monthly payment based upon 20% down.

Florida Real Estate Experts' Outlook on Home Prices

As mortgage rates continue to linger around 7%, and as the Fed continues monitoring inflation before moving forward with any rate cuts, we asked our Florida real estate experts what this means for Florida housing prices in the months and year ahead, and how this is currently affecting housing demand. Below are comments from a few of our experts. Below are comments from a few of our experts. To view all comments from all experts, be sure to visit out our Florida Real Estate page where our experts provide their market outlook and housing predictions.

Jacksonville

A Healthy and Vibrant Market

"My outlook for the Jacksonville real estate market in the 2nd half 2024 is that buyer demand will continue to be healthy, and only increase going forward as the Fed is now mentioning about rate cuts coming in mid-to-late this year. I also expect our Jacksonville home price appreciation going forward to be much less than we saw during the pandemic years and think we’ll see appreciation more in the 1% - 5% range in the year ahead.

Fort Lauderdale

Consistent Sales with Low Inventory

"The Fort Lauderdale real estate market continues to see strong housing demand in the summer of 2024, which is keeping available inventory constrained, but not nearly as extreme as was during the market peak." Housing inventory in Broward County still remains low at a 3 month supply of homes which is keeping home prices near record levels. For homes in high-demand areas, we are once again experiencing multiple offers taking place, near or slightly above ask price, but again, nowhere near the level we experienced during the market peak.

Lakewood Ranch

Continued Healthy Demand

"My outlook for the Lakewood Ranch and Sarasota markets for the year ahead is a continuation of the same persistent demand derived from retirees relocating to our region, families seeking our top-ranked schools as well as work-from-home lifestyle changes. However, with the now higher rates and general increase in the cost of living across the board, we will likely continue to see more and more buyers priced out of our market, allowing inventory levels to continue rising over time. I also expect to only see the realistically-priced and well-marketed listings continue to sell, in addition to continued strong interest from all-cash and heavy-cash buyers.
View all Florida market outlook comments from our experts.