It’s easy to get caught up in what everyone’s saying about real estate, especially in Florida, where rumors and myths spread fast. Whether it’s about rising interest rates, the impact of hurricanes on insurance, or the future of the housing market, people outside the business often get the wrong idea. As an expert in real estate and with over 3,500 transactions under my belt, I’m here to cut through the noise and give you the facts.
In this article, we’re going to debunk some of the biggest myths swirling around right now. So, sit back, and let’s set the record straight.
Myth #1: Interest Rates Are Going Up, and It’s Going to Stay That Way
You’ve probably heard the buzz: “Interest rates are through the roof!” or “It’s impossible to buy a home with rates like this!” It’s true that mortgage rates have increased recently, but here’s the catch—they’re not going to stay high forever. In fact, what we’re seeing right now is more of a short-term spike than a long-term trend.
The Federal Reserve recently cut interest rates by 0.5%, and while everyone was expecting this to turn the market around immediately, it hasn’t. Why? Because people and companies are waiting for more cuts. It’s all about expectations. The first rate cut is just the beginning, and the market is holding off until we see the two additional cuts expected by the end of the year.
I predict that by next year, we’ll see mortgage rates drop to the high 4s, and here’s the kicker: this will happen by September, which is historically the best month for real estate. Once those additional cuts come in, people who are sitting on the sidelines will jump back into the market. So, while rates are temporarily higher, the smart move is to prepare for what’s coming. By the time the rates are in the 4s, the market will be ripe for action.
Myth #2: Hurricanes Are Why Insurance Rates Are So High in Florida
It’s a common belief that the recent spikes in Florida’s insurance rates are due to hurricanes. After all, Florida does get hit by storms, right? But here’s the truth: hurricanes have always been part of Florida’s reality, and they haven’t caused insurance to rise dramatically before. In fact, most areas of Florida don’t see major hurricane impacts more than once every fifty years or so.
So, why are insurance rates so high now? The real culprit isn’t Mother Nature—it’s fraud. Over the years, Florida has dealt with issues like sinkhole fraud, where claims were made for damages that didn’t really exist. Then, there was a wave of fraudulent lawsuits filed by lawyers, taking advantage of loopholes and suing insurance companies for practically nothing.
This is what truly pushed up the insurance rates. The good news? In 2022, legislation was passed to put an end to these fraudulent practices. Now that the fraud has been stopped, we can expect insurance rates to stabilize, and that’s going to be a big win for the real estate market in Florida.
Myth #3: The Federal Reserve Can Fix the Housing Market
Many people seem to believe that the Fed can magically fix the housing market by tweaking interest rates. Unfortunately, that’s not how it works. The housing market is influenced by so many different factors, and the Fed’s control over interest rates is only one piece of the puzzle.
Here’s the real issue: the housing market in Florida (and across the country) is facing a supply problem. We simply don’t have enough homes to meet the demand. Even if the Fed lowers rates, which makes borrowing cheaper, it doesn’t address the fundamental issue of supply. As Federal Reserve Chair Jerome Powell said recently, “The real issue with housing is that we don’t have enough housing… and this is not something the Fed can really fix.”
That said, the Fed can make debt cheaper, which helps people buy homes. But until we solve the supply problem, the market is going to remain tight, no matter what the Fed does. So, while the Fed plays a role, it’s not the all-powerful force many think it is when it comes to housing.
Myth #4: Rising Federal Debt Won’t Impact the Housing Market
Another common misconception is that the rising federal debt won’t have a long-term impact on the real estate market. The reality is quite different. The federal government is sitting on a mountain of debt—$35 trillion, and it’s growing faster than our economy. If we don’t get a handle on this, we’re looking at higher inflation and higher mortgage rates in the future.
Here’s why this matters: inflation eats away at the value of money. If the federal government keeps spending, and that spending adds to the deficit, we could see a future where inflation drives up borrowing costs. However, there’s a silver lining. I believe that the Fed will have no choice but to lower rates to around 3% to manage the debt and keep things moving. This lower rate will be good for the housing market long term, even though inflation remains a looming concern.
Myth #5: Now’s a Bad Time to Invest in Florida Real Estate
Given all the talk about rising interest rates, high insurance costs, and market uncertainty, many people think now is a bad time to invest in Florida real estate. But here’s the thing—this couldn’t be further from the truth.
Sure, there’s uncertainty, and yes, some people are waiting for rates to drop before jumping in. But that’s exactly why now is the best time to invest. While others are waiting on the sidelines, there are deals to be found. Sellers are holding onto properties longer, and inventory is starting to rise. If you’re an investor, this is your moment to get in, sharpen your pencil, and find those properties that are just sitting on the market waiting for the right buyer.
When mortgage rates drop into the 4s next year, competition will increase, and prices are likely to rise again. So, while others are fearful, this is the time to be greedy and grab those deals before everyone else realizes what’s happening.
Written by Jorge Vazquez, CEO of Graystone Investment Group
With over 20 years of experience in real estate and thousands of transactions under my belt, I’ve seen it all. My goal is to help you make smart decisions based on facts, not fear. Whether you’re a new investor or a seasoned pro, understanding the realities of today’s market is key to your success. Florida’s real estate market is full of opportunity, but it’s up to you to stay informed and take action when the time is right. Let’s navigate this together—because when you know better, you do better.
