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South Florida real estate market 'in trouble' for first-time home buyers, agent says

'Any time the interest rate changes even slightly, there are buyers that get sucked back out of the market,' Holly Meyer Lucas says
Posted at 5:14 PM, Jul 27, 2023

WEST PALM BEACH, Fla. — With another interest rate hike this week, now many people are questioning if it will impact the South Florida housing market. Also, to whom exactly will it make a difference?

"I don't know how people can afford houses in South Florida anymore because they are so expensive," Bill DiStefano of Palm Beach Gardens said.

It's a sentiment you may have heard before and one being echoed by everyday people.

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"You've got a number of people moving down from the north that are used to high prices, from the west that are used to high prices," DiStefano said.

Real estate agent Holly Meyer Lucas discusses the latest trends in the South Florida housing market.
Real estate agent Holly Meyer Lucas discusses the latest trends in the South Florida housing market.

"Our area is so unique in that there are a lot of first-time home buyers that can pay cash, which I guess is kind of a Palm Beach problem," real estate agent Holly Meyer Lucas said.

South Florida is like other places in some aspects.

"Any time the interest rate changes even slightly, there are buyers that get sucked back out of the market," Meyer Lucas said.

But in other areas, she said it's not.

"It doesn't impact us as much as it does around the rest of the country because we do have so many people who are cash buyers," Meyer Lucas said.

She said it can be felt especially by first-time home buyers.

"Our area is in trouble in terms of the housing market, first-time home buyers and home buyers who are in that working-class America are really struggling to be able to afford homes anyway at our current prices," Meyer Lucas said. "And then with interest rates fluctuating, it makes the predictability around whether or not you are going to be able to afford a home just out of the question."

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Inflation remains high in South Florida as interest rates rise again

Matt Sczesny
5:10 PM, Jul 26, 2023

That boxing out can be bruising in the form of buyer fatigue.

"If you are approved up to $500,000, and the interest rate changes, now all of a sudden you can only afford $450,000," Meyer Lucas said. "That $50,000 is significant in our market."

Greg McBride, a senior economist at BankRate.com, agrees that South Florida is unique and said demand still outstrips supply.

"They don't have the number of people moving in every day that South Florida has, but that's pushed up prices," McBride said. "Even in the face of 7% mortgage rates, it hasn't done much to cool them off."

Many question if there is a solution in sight.

"For mortgage rates to come down in a meaningful way, inflation needs to come down in a meaningful way," McBride said.