Housing inventory in California and across the Sun Belt is rising to levels not seen in years, signaling potential price declines in markets that have remained stubbornly expensive despite high mortgage rates.
The number of active listings in California reached 61,000 in September, a five-year high and a dramatic 41% increase from the previous year, according to Realtor.com data cited by Nick Gerli, CEO of Reventure Consulting.
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Gerli said areas like San Diego, Stockton, Modesto and Oxnard are seeing an increase in supply.
The story is similar across the South, where supply has risen to 493,000 listings, now just 8% below pre-pandemic levels. The wave includes several states, including Florida, Texas, Tennessee and Georgia.
“What is happening in the South and West is very interesting,” Gerli said on X, formerly Twitter. “The stock in these two regions is basically back to normal. And the months of delivery [are] now above pre-pandemic levels.”
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The inventory build-up comes as sales volume plummets. The California Association of Realtors reported that sales in August 2024 were among the lowest ever for the month, despite expanded options for buyers.
The shift is clearly visible in Florida, where price corrections are already taking place in some markets. Cities such as Cape Coral, Lakeland, Tampa and Crestview are included in the list. Some condo owners in those areas are cutting prices by as much as 40%, according to the New York Post, as they face repair costs due to new state legislation.
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Adding to the market pressure, the average down payment for American homebuyers has reached an all-time high of $67,500, according to Redfin. Buyers are putting down higher percentages – typically 18.6% of the purchase price, compared to 15% last year – to compensate for high mortgage interest rates.
Real estate data company Attom has identified more than 50 counties across America that are at risk of a home price crash. California, New Jersey and Illinois have the highest concentration of vulnerable markets, based on indicators such as underwater mortgages, foreclosures and unemployment rates.
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“The housing market boom continues to gain momentum. However, some markets are showing signs of potential instability,” said Attom CEO Rob Barber.
The New York City metro area is also showing signs of vulnerability. Kings County (Brooklyn), Richmond County (Staten Island) and Bronx County, along with four suburban New Jersey counties – Essex, Passaic, Sussex and Union – are among the areas most at risk, according to Attom.
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In California, the potential downturn extends across the entire state. Northern counties like Butte (Chico) and Humboldt (Eureka), central regions like San Joaquin (Stockton) and Stanislaus (Modesto), and southern areas like Riverside and San Bernardino are all showing warning signs.
With inventories continuing to rise and sales remaining sluggish, the coming months could reveal whether the warning signs translate into price corrections in some of the nation’s hottest housing markets.
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This article Real Estate CEO Warns: Home Prices in California, Florida Will Fall Big as Inventory Surges originally appeared on Benzinga.com
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