Florida's housing market is seeing 'nightmare scenarios' as buyers back out due to affordability concerns

Florida's housing market is encountering a surge of "nightmare scenarios," with an increasing number of home deals falling through as buyers hesitate.

In major metros such as Orlando, Florida, and Tampa, approximately 21% of home-purchase agreements were cancelled in June, according to Redfin data. These cities lead the nation in home-purchase cancellations, significantly exceeding the national average of 15% last month.

Rafael Corrales, a Redfin agent in Miami, attributes this trend to nationwide concerns about housing affordability.

"We're seeing nightmare scenarios where deals fall apart at the last minute for minor reasons," Corrales said. "Buyers often back out during the inspection period due to issues they discover, but affordability is the real underlying problem."

Home prices in the U.S. rose another 4% in June, reaching a record high of $442,525, according to Redfin. In Florida, where prices have surged since the pandemic, last-minute cancellations may be particularly pronounced.

High borrowing costs also contribute to the market slowdown. The 30-year fixed mortgage rate held steady at 6.7% last week, according to Freddie Mac.

The challenging affordability conditions are cooling home prices and housing activity, especially in the Sun Belt. In states like Florida and Texas, home prices are falling rapidly as supply outstrips demand, with inventory in Florida increasing by up to 50% compared to last year.

Some real estate experts suggest that this correction could extend across the Sun Belt, where home prices have been rising since the pandemic. Nick Gerli, CEO of Reventure App, predicts that prices in the region could drop by as much as 15%, noting that many units are already overvalued.