Andrew Gomez-Rivera said buying a home was almost too easy — that’s what made his experience abnormal.
Gomez-Rivera, a 30-year-old Gainesville police officer, said he shopped for less than three months before he found the perfect fit. He and his girlfriend finalized their purchase in early September.
Qualifying for a mortgage was also straightforward, and interest rates weren’t on his radar when he applied, Gomez-Rivera said.
“I’ve always heard you shouldn’t try to time it and just do it when it’s right for you,” he said.
But many Floridians still can’t afford to buy a home. High borrowing costs have been one hurdle.
That could soon change as interest rates fall.
Unlocking affordability
In early September, mortgage interest rates fell to their lowest level in nearly a year. As of Oct. 10, the average rate on a 30-year fixed-rate mortgage — the most popular home financing option in the U.S. — was 6.32%.
That’s substantially lower than the fall of 2023, when rates peaked at about 8%, according to mortgage giant Freddie Mac.
The Federal Reserve recently initiated an interest rate-cutting campaign. The Fed’s actions indirectly influence longer-term bonds, to which mortgages are closely tied.
Sometimes, mortgage rates can rise on news of a Fed cut if financial markets have already factored it into bond prices. Other variables, such as inflation expectations, can cause yields to rise.
When the Fed lowered borrowing costs Sept. 17, it also signaled plans to continue cutting rates throughout the year. Mortgage rates actually ticked up that day, but could slide back as the central bank continues to cut interest rates.
Simply put, lower mortgage rates provide buyers more purchasing power, said Megan Ennis, CEO of Citrus Lending, a mortgage broker in Citrus County.
When rates fall, buyers can qualify for larger loans and afford pricier homes at the same monthly cost as they could at higher interest levels.
Ennis said many of her clients have been locked out of the housing market, not strictly because of high listing prices, but because mortgage financing has been prohibitively expensive.
“I see these young couples that are starting out and they have a family, and they’re both working,” she said. “And at the end of the day, if they only qualify for a $200,000 house, there’s no $200,000 house on the market.”
Last month, the median home in Citrus County sold for about $268,000, according to Realtor.com. Between 2020 and 2024, home prices in Florida skyrocketed, diminishing affordability.
Prices have been flat or falling since late last year.
The South experienced a construction boom during the pandemic as developers raced to accommodate surging population growth. Florida had the highest net migration increase in the country in 2022, according to U.S. Census data.
Now that southbound relocations have slowed, states like Florida are left with a glut of new homes, exerting downward pressure on prices.
But is it a seller’s market?
When rates fall, sellers can also benefit.
Melvin Caswell said he’s confident his home in Gainesville’s Duckpond neighborhood will move off the market quickly — in part due to the downward trend of interest rates. Cheaper mortgages often drive up demand for homes.
“This is a move in the right direction,” Caswell said. “It just gives me [comfort] — I can sleep at night.”
Caswell, 76, has lived in Duckpond for 12 years. He said he plans to retire after selling his home and expects to see a flurry of offers as soon as it’s listed.
Some homeowners are less optimistic about their selling prospects and aren’t ready to part with their properties.
Another factor holding back inventory and propped up prices is the so-called “lock-in effect,” when homeowners who secured mortgages at much lower rates are reluctant to move and refinance at today’s higher rates. Lock-in artificially constricts supply.
Sonya Nasser, an Ocala-based real estate agent, said sales velocity in her market has been sluggish, a trend she partly attributes to lock-in.
“I do see that people are holding on to their homes because of their rates,” Nasser said. “There’s a lot of properties that are right now sitting there in the market for several months.”
Realtor.com estimates more than four in five U.S. homeowners with outstanding mortgages secured loans at rates below 6%. Just under a third financed their homes at rates between 3% and 4% during the pandemic, when borrowing costs plummeted.
Nasser said she expects further rate cuts to juice demand for homes, injecting much-needed momentum into the market.
“I think it's going to help with the affordability of the properties,” she said. “But it also depends on their income, because I mean, we’re never going to see pandemic interest rates [again].”
Felix Clemente financed a Jacksonville home in 2020 at a sub-4% interest rate. But after suffering injuries in a car accident and taking medical leave from work, he fell behind on his monthly payments and had to sell.
Clemente, 56, relies on monthly disability checks and supplements his income driving for Uber. He’s currently renting in Lake City and paying off his debt. He said he isn’t in the market to buy until he improves his credit score.
“I was living for a while on the savings I have, so I’ve used all my credit cards,” Clemente said. “So basically, the only thing I have right now is a bunch of credit card debt.”
What’s Next?
Not much has changed in Alachua County’s housing market since interest rates dipped, said Kait Alexander, a Gainesville-based realtor.
Anything above 6%, she said, is not low enough to trigger the kind of buying frenzy she saw at the height of the pandemic.
“I don’t think it is this overnight solution,” Alexander said. “There’s an atmosphere of sort of economic fear still that this little bitty rate [adjustment] didn’t really change.”
Some bankers and real estate agents consider 6% a key psychological threshold for buyers.
Softer demand might make a more meaningful difference for affordability, Alexander said.
The supply of homes in Gainesville is robust, but so is demand, especially for lower-priced inventory, she said, adding that buyers have more leverage in the luxury housing market, where competition is less fierce.
That appears consistent with statewide housing trends, according to Leslie Swart, a mortgage loan originator who serves clients across Florida.
Demand remains healthy, which could come into tension with falling interest rates, Swart said.
As rates tick down, she said she expects to see a surge in homebuying activity.
“It helps for sure,” Swart added. “People [who] maybe were on the sidelines are saying, ‘Okay, let’s look now and see what I can afford.’”