Certainly a rising inventory is affecting our market here in Florida, but so are rising property taxes and insurance rates. Using "generalities", last year my property taxes and insurance on this home were $756/month. For a new owner this year those costs would be $1,688/month (or with the insurance quote from my past agent, $2,170/month).  Last year, if I took out an 80% loan at 6% on a $900,000 purchase price my payments would have been $5,073/month. At a 28% ratio, I would have needed an annual income of $217,400.

Flood insurance rates only rose by $75 - from $1,020/yr to $1,095/yr.  Homeowner insurance rates rose from $1,729/yr to $4,900/yr (or $9,000/yr with the quote from my past insurance agent). Property taxes for a new owner would not have the benefit of past "Save our Homes" property tax caps, so my $6,319 tax bill would rise to $14,259/yr for the new owner.

Taking the lower insurance increase, the new owner earning $217,400 would only be able to afford a house worth $705,738 vs my being able to afford the home at $900,000. If the new owner took the higher insurance quote, he'd only qualify for a $607,330 house.

Conclusion:  rising insurance rates and property tax rates can make a difference of $200,000 - $300,000 in the price of your new "affordable" home. 

That also indicates that a decrease in the average price of a home does not necessarily reflect that the price of an individual home has dropped that much, but that the average home purchased has dropped  -  reflecting more buyers buying less expensive properties, and thus affecting the average. 

 Sharon Simms, Real Estate Agent selling homes in St. Petersburg, Florida, the Gulf Beaches and the Tampa Bay area.