Mortgage rates are back around 6.75% in Florida, while pending sales nationally just turned negative for the first time since late 2025.
Now you’re seeing price cuts and distressed sellers in Florida.
And the really interesting part is buyers taking on riskier mortgages just to make the numbers work.
That tells me the problem isn’t simply that houses are expensive.
The monthly payment is breaking the market.
If rates stay near 7%, more buyers get priced out, sellers have to cut harder, and the people who still buy have to stretch further.
That’s how a housing slowdown starts feeding on itself.
And Florida may be one of the first places where you can actually see it happening.
Florida housing market goes into meltdown… Surge in price discounts and distressed sellers…
When the owner of a three-bedroom townhouse in Orlando’s 300-acre Margaritaville resort, a master-planned estate near the Walt Disney World Resort, sold the property earlier this year, he was in for a nasty shock.
He had purchased the newly built home for $710,000 (£525,000) in 2022 as a short-term buy-to-let investment, seeking to cash in on booming demand from both holidaymakers and families relocating to Florida in the wake of the pandemic.
Since then, the market has undergone a sea change. When the investor sold up this year, he received just $340,000 – less than half what he paid four years ago.
The sharp drop in price put him firmly in negative equity and he had to pay several hundred thousand dollars to his bank to settle the debt.
But the bill would have been even bigger if he had waited, warns James Donovan, the owner of Team Donovan brokers, which conducted the transaction.
“That was six months ago,” he says. “Now, I’m negotiating on a property with the same kind of floor plan, and we’re talking a price of around $300,000.”
Demand for riskier mortgages rises along with rates…
Mortgage rates continue to move higher and that has demand for home loans stuck in place. It also, however, has more borrowers opting for riskier loans that offer lower rates.
Total mortgage application volume rose just 0.8% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased to 6.79% from 6.78%, with points decreasing to 0.65 from 0.66, including the origination fee, for loans with a 20% down payment.
“Mortgage rates reached their highest levels in four weeks as investors’ concerns about inflation and growing deficits push yields higher across the globe,” said Mike Fratantoni, senior vice president and chief economist at the MBA, in a release.
Applications for a mortgage to purchase a home did eke out a small gain, up 2% for the week but still 0.2% lower than the same week one year ago. Last year, rates were 15 basis points lower.