The Big Move: I’m over 65, disabled and am getting a $200,000 divorce settlement. Can I afford a house in Florida, or should I look at other states?

Given that interest rates have risen, will housing prices drop, and if so, by how much?

I live in Florida, and housing here is extremely expensive. Food prices are also rising another 10 to 50 cents every two weeks. I heard on public radio that due to high demand, the housing market in Florida won’t change much.

I’d like to know, will housing costs go down in other states? I am considering going back to Virginia, or to the outskirts of Washington D.C. I want to leave my daughter a small home that’s paid for. I don’t want to rent. It’s very important to me to leave her a home. Thank you for your time.

Frustrated

‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.

Dear Frustrated,

I don’t have a crystal ball. It’s likely that home prices will go down, but it won’t be a fire sale like what we saw after the Great Recession. So it may be worth starting your search now.

It’s a tough time to buy a home. Not only are mortgage rates high, but the number of homes available for sale is still low. Many would-be sellers are not willing to give up homes that they secured with an ultralow mortgage rate.

Which means that homes are still expensive — even unaffordable — for many buyers.

And you’re right: Florida is expensive. According to data from Zillow Z, +2.17% provided to MarketWatch, only 15% of homes listed for sale in Florida are priced below $200,000.

And while home prices have begun to drop — according to a recent report from S&P CoreLogic Case-Shiller, which tracks home prices regularly, prices did drop in the latest month — they’re still up 8.6% over last year. So while prices may not be increasing, homes are still expensive.

Mark Zandi, chief economist at Moody’s Analytics, told MarketWatch that he expects home prices in the U.S. to fall by as much as 10% peak to trough over the next two to three years. However, you have to take into account that those prices have increased by 40% since the start of the pandemic.

“I don’t expect U.S. house prices to crash,” Zandi told me. “Of course, if the economy suffers a recession, then the house-price declines will be more significant. But even then, a crash seems like a stretch.”

If you’re planning to buy a property outright, all in cash, and not take out a mortgage, one option is to look for a smaller home in Florida, perhaps one in a not-so-hot area. There are many single-family homes and condos available in the state that are selling for under $200,000, but they may be small or require some work. Weigh those options, if you’re up for it.

When the time comes for your daughter to inherit the home, perhaps she’ll have the financial means and the inclination to fix it up. So talk to her and see what her priorities are.

If you both would prefer a condo, there are even some options available by the beach. But take the cost of property insurance into account: With the increasing risks of storms and flooding in Florida, that can really bust your budget. Also remember that any condo will have a monthly association fee.

Your other option is to look in Virginia or the outskirts of Washington, D.C. According to Zillow, 17.1% of homes in Virginia are priced below $200,000 — a higher percentage than in Florida.

For reference, across the U.S., about one-fifth of homes — both single-family homes and condos — are listed below $200,000.

Also ask your daughter if she would prefer a house in a suburban area or a unit in the city. The price ranges vary by area.

The obvious downside of moving north: the cold. Winters can be tough, and if you or your daughter are used to the warmth of Florida, you might find it difficult to spend the colder months in the Mid-Atlantic region.

Whatever you decide, it’s worth hiring a realtor to help you shortlist homes for sale.

The bottom line: There are few buyers in this market. So start with a search for homes in Florida first, then move that search up north. Broaden your search to houses and condos. And if you find something good, jump. Sellers are motivated, so there could be room for negotiation.

I understand that you don’t want to rent. Renting can be unstable, especially if you have a landlord who decides to raise your rent when your lease is up.

So it’s time to get moving and start looking at homes. All the best in your search.

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