Jul 8, 2023 - Real Estate

Golden handcuffs lock up Florida's housing supply

Illustration of a handcuff on a keychain in a lock

Illustration: Sarah Grillo/Axios

Nine in 10 homeowners with mortgages in Florida have a rate below 6%, per Redfin data shared with Axios. That's leaving them locked into place and buyers with few homes to choose from.

Why it matters: Mortgage holders are experiencing the "golden handcuffs" phenomenon: They might have a great rate now, but likely can't move without spending a lot more cash, explains Redfin chief economist Daryl Fairweather.

By the numbers: More than 20% of homeowners with mortgages in Florida had a rate below 3% as of late 2022.

  • And only one in 10 has a rate above 6%.

What they're saying: "​​The 'golden handcuffs' phenomenon is very real. It has basically shifted the thought process of buying and selling a home from 'do I want to buy or sell' to 'do I have to buy or sell?'" local real estate expert Adam Grenville says.

  • This is a sellers' market, Grenville says. While a balanced market has six months of inventory, Tampa-St. Pete-Clearwater has two months' supply, he said.

Zoom in: Chris Cordona bought a St. Petersburg new build in 2019, with a 3% mortgage rate.

  • If he sold his house — even for twice what he bought it for — he wouldn't be able to buy a place with equal value with the money.
  • "So I guess we are wearing golden handcuffs, but we love St. Petersburg for all its quirks and individuality," Cordona tells Axios. "Where else in Florida could we go to the Dali Museum and see a drag show on the same day!"

The golden handcuffs phenomenon isn't new, but because mortgage rates have more than doubled, it's more stark than ever, Fairweather tells Axios.

Zoom out: It's not just a Tampa issue. In the U.S., nine in 10 homeowners secured mortgage rates below 6%, per a national Redfin report. Meanwhile, mortgage rates have swung between 6% and 7% in the U.S. in the last 10 months.

What's next: New construction, lower mortgage rates, and cheaper home insurance would help restore some balance in Tampa's housing market, Grenville says.

Monthly mortgage payment in Tampa metro area
Data: Redfin; Chart: Alice Feng/Axios

Buying a median-priced home in Tampa requires a lot more cash than it did in 2021.

Yes, but: Buyers are also exploring adjustable-rate mortgages or buydowns in hopes of a lower monthly payment, Fairweather says.


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