Hopeful homebuyers are seeing their wealth drop as trade tussle wipes out stock market gains
Mortgage brokers in Florida can add a drop in wealth, thanks to a stock market plunge tied to new Trump administration tariffs, to the list of issues the state’s homebuyers are facing.
The president’s decision to place baseline 10% tariffs on all countries, and harsher penalties on many trading partners, sent markets tumbling last week and suggested further pain could be ahead.
The consequences of that new trade war only adds to homebuyer hurdles including insurance issues, affordability concerns, and steep condominium financing requirements.
The Dow Jones dropped 5.5% on Friday, a decline of 2,231 points, while the S&P 500 fell 5.97% and the Nasdaq Composite dropped 5.82%.
CNN cited a report from Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, stating that the S&P 500 lost $5.06 trillion in market value on Thursday and Friday.
Melissa Cohn (pictured, top left), regional vice president at William Raveis Mortgage, noted that one of the biggest challenges already impacting potential buyers is a significant loss in wealth.
“The 800-pound gorilla right now is the fact that there’s been a significant loss in wealth with the drop in the equity market,” Cohn told Mortgage Professional America. “Most people’s wealth is either in their home or in their 401k, for the most part. And when your 401k has dropped in value significantly, you feel less secure to go ahead with the purchase.
“Lower rates are a wonderful thing, but having less wealth is another issue.”
Following Trump's global tariffs, markets anticipate the Fed will cut rates by 100 basis points in 2025 to counter recession fears.https://t.co/vjnxl4B2k0
— Mortgage Professional America Magazine (@MPAMagazineUS) April 4, 2025
While the immediate impact of the tariffs was a steep stock market decline, the projected increase in building materials is likely to lead to higher new home construction prices on the horizon. It’s something Cohn doesn’t want to think about.
“If I was to start construction on a new home today, I would be crying,” Cohn said.
Inventory increases, but condominium market presents challenges
Those challenges arise at a time when inventory levels have been increasing. Realtor.com reported housing inventory for sale in February increased to 168.717, the highest total since the website began tracking data in 2016. It represented a 34% year-over-year increase.
Meanwhile, Redfin has reported an annual decrease in sales prices in three major Florida markets: Jacksonville, Tampa, and Orlando.
Craig Garcia (pictured, top right), president of Capital Partners Mortgage, cited an increase in inventory without a corresponding rise in demand as the primary factor contributing to the price decreases.
“Affordability has been a big factor for some time, but the lack of available homes was supporting prices,” Garcia said. “Inventory has now been on the rise without an offsetting increase in demand.”
Garcia noted that one of the biggest challenges brokers in Florida face is financing condominiums. Redfin reported Friday that 68.4% of US condos sold below their original asking price in February, due in part to the increase in available inventory.
“With the additional required savings the associations have been required to implement, coupled with needed repair projects while simultaneously dealing with increased insurance costs, some condos have become significantly harder to maintain for some owners,” Garcia said. “It has led to more inventory coming on the market while financing has become more challenging.”
Insurance costs another major challenge
Like in other parts of the country, Cohn said insurance is always a concern in Florida, with significant cost increases.
“I was dealing with a client in Naples on a $2 million villa, where the insurance quotes ran from a low of $10,000 to a high of $40,000,” Cohn said. “That’s enough of a difference to make a decision as to whether to buy or not to buy.”
Garcia concurred that rising insurance costs are making home buying and homeowning much more expensive. The condominium market has been hit especially hard by increases in insurance, making it challenging to find mortgage financing.
“In an effort to save money on premiums, some condominiums have taken stripped-down insurance policies,” Garcia said. “This can sometimes limit the kinds of loans owners can obtain there, which has a compounding effect.”
While Cohn isn’t ready to predict a situation like the 2008 housing crisis, she is concerned that continued tariffs could lead to a new housing crisis.
“In 2008, the real estate markets paused for like six months,” Cohn said. “We didn't know it until we were a month into it, how bad it was going to be. I haven't had anyone that I'm working with currently tell me that they are going to pull out of their deal.”
However, Cohn believes that if the large market decreases spill over into a second week, more mortgage deals will be held up.
“If it continues as bad as it is, people will start pulling out of deals next week,” Cohn said.
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