Several southern cities that experienced rapid growth during the pandemic are now facing a cooling real estate market characterized by falling home prices and increased inventory beyond pre-pandemic levels
According to the June Mortgage Monitor Report released by the Intercontinental Exchange (ICE), 14% of major markets now have inventories at or above pre-pandemic levels, up from 10% just a month ago. Florida, Texas and Colorado account for almost all markets, with San Francisco the only exception outside these states.
Do not miss it:
Lakeland, Florida, leads the way with a 43% surplus of homes for sale compared to the 2017-2019 average. Austin, Texas follows with a 29% increase, while San Antonio rounds out the top three with a 27% increase in inventory.
The figures mark a reversal from the frenzied buying that characterized markets at the height of the pandemic. In Austin, for example, home prices increased nearly 70% between 2020 and 2022.
Now the Texas capital is seeing price declines, with a 0.25% drop in April alone, according to data from ICE Mortgage. According to a recent report from the National Association of Realtors (NAR), it was noted that in Florida, home prices in areas like Cape Coral fell 4.4% in the first quarter, while home prices in Panama City fell 3.8%.
Trending: this real estate fund backed by Uber CEO Dara Khosrowshahi gives you instant access to a portfolio of rental properties, and you only need $100 to get started.
“The story this spring is really a matter of higher interest rates, less affordability, [and] “There’s less demand that’s allowing inventory to grow across the country and you’re seeing that generally across the country,” Andy Walden, vice president of Enterprise Research Strategy at ICE, said in a video posted to LinkedIn last week.
Several factors contribute to the recalibration. One is the increase in property insurance premiums, especially in Florida and Texas, where severe weather conditions have caused average premiums to be well above the national average.
In addition, homebuilders have ramped up development in the South. Florida and Texas saw the highest number of homes approved for construction in April, according to U.S. Census Bureau data. So far, the two states have surpassed other regions in new housing permits.
Trending: Miami is expected to replace New York as the financial capital of the US. Here’s how to invest in the city before that happens.
“About one in seven major markets across the country are now at or above pre-pandemic levels, and the majority of those are in Texas, Florida or Colorado,” Walden said. “Overall, we are seeing 30% more inventory for sale than we had at the same time last year, and we are in the best inventory position since mid-2020.”
At the same time, the migration patterns that fueled the boom are changing. While the South remains popular, moving data suggests that Texas and Florida are not as popular as they once were, with Tennessee, the Carolinas and Georgia now favored.
Austin, once a top destination during the pandemic, is now seeing many of its residents relocate. According to data from Pods, Austin is set to become the fifth-most relocated city by 2024.
However, the central challenges remain with rising house prices and increased mortgage rates. Although mortgage rates are at the highest levels last seen at the turn of the century, according to the April ICE Home Price Index, the average home has increased in value by 50% since the start of 2020, more growth than in any other decade since the 80s.
Keep reading:
“SECRET WEAPON FOR ACTIVE INVESTORS” Boost your stock market game with the #1 “news & everything else” trading tool: Benzinga Pro – Click here to start your 14-day trial now!
Want the latest stock analysis from Benzinga?
This article Pandemic-era Home Prices in Booming Cities Fail as Prices Fall originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
