House Purchases Fail in Miami

Due to current controversies in the Miami real estate market, more than 900 sales agreements for home purchases have fallen through before closing so far this year. These potential contracts, according to statistics, are failing due to rising mortgage rates and concerns generated by mandatory reforms that must be carried out on condominiums.

Although data indicates that purchase rates remain above the national average, this year more than 16% of contracts were rescinded in Miami-Dade County, causing the purchase rate to remain relatively stable in recent years.

According to the information gathered, in the United States, 15% of home purchase contracts were canceled mid-year, a percentage that has broken records from previous years. Likewise, this premature cancellation rate is notably higher in several regions of Florida, including Miami-Dade County.

Statistics indicate that approximately one in five buyers withdrew from home purchase contracts in Orlando, Jacksonville, and Tampa. Meanwhile, in other areas like Miami-Dade, there were fewer indecisive people. All these statistics suggest that the real estate market is currently volatile and unpredictable.

And although there are several factors that can affect whether a sales contract reaches its conclusion, the most prominent are high mortgage interest rates and the repairs now required by the state of Florida for all condominiums or apartments in regular condition.

When making an offer on a property, buyers usually provide an earnest money deposit. This money contributes to the purchase price if the deal closes. Despite this, and the risk of losing this money, many buyers often proceed to cancel the contract when they believe they could lose much more money than if they bought the property.

With the current demands of the state of Florida regarding repairs, it has been observed that often after a property inspection, costly repairs appear that the seller refuses to cover, which could cause problems with the appraised value of the house or difficulties for the buyer to access a mortgage.

On the other hand, high interest rates and continuous market increases mean that fewer and fewer people can afford to buy a home, making housing affordability more likely to continue causing conflicts.

South Florida has traditionally had a large number of cash buyers, which protects them from fluctuating borrowing costs. By June, more than one in four single-family homes were sold for cash, specifically in the city of Miami. And although these borrowing costs have decreased, they remain significantly higher than before and during the pandemic.

Therefore, high mortgage rates, high costs, and borrowing prices are factors that increasingly pose significant affordability challenges to many potential buyers in the real estate market.

Available Foreclosures:

Miami-Dade: 150 homes available.

Orlando: 120 homes available.

Jacksonville: 130 homes available.

Tampa: 140 homes available.

By Elias DaSilva | October 1, 2024