Several Southern cities that experienced rapid growth during the pandemic are now facing a cooling housing market characterized by falling home prices and rising inventory surpassing pre-pandemic levels.
According to the June Mortgage Monitor report released by the Intercontinental Exchange (ICE), 14% of major markets now have inventory at or above pre-pandemic levels, up from 10% just a month ago. Florida, Texas, and Colorado account for almost all of the markets, with San Francisco being the only exception outside of these states.
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Lakeland, Florida leads the pack with a 43% surplus of homes for sale compared to its 2017-2019 average. Austin, Texas, follows with a 29% increase, while San Antonio rounds out the top three with a 27% inventory increase.
These figures mark a reversal from the frenzied buying that characterized markets at the height of the pandemic. In Austin, for example, housing prices rose nearly 70% between 2020 and 2022.
Today, the Texas capital is seeing a decline in prices, with a 0.25% decline in April alone, according to data from ICE Mortgage. According to a recent report from the National Association of Realtors (NAR), it is stated that in Florida, areas like Cape Coral saw home prices drop 4.4% during the first quarter, while home values Housing in Panama City fell 3.8%.
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“Really, the scenario this spring has been high interest rates, lower affordability and lower demand, which is allowing inventory to grow across the country and you’re seeing that across the country,” Andy Walden, vice president of corporate research. Strategy at ICE, said in a video posted on LinkedIn last week.
Several factors contribute to recalibration. One is the soaring property insurance premiumsparticularly in Florida and Texas, where severe weather events have caused average premiums to rise well above the national average.
Additionally, home builders have acceleration of development in the South. Florida and Texas had the highest number of homes approved for construction in April, according to U.S. Census Bureau data. Since the start of the year, both states have outpaced other regions in terms of new housing permits.
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“About one in seven major markets across the country are now back to pre-pandemic levels or above, and the majority of them are in Texas, Florida or Colorado,” Walden said. “Overall, we are seeing 30% more inventory for sale than this time last year, and we are in the best inventory position we have been in since mid-2020.”
At the same time, the migration patterns that fueled the boom are changing. Although the South remains popular, moving data suggests that Texas and Florida are no longer as popular as they once were, with Tennessee, the Carolinas and Georgia now favored.
Austin, once a favored destination during the pandemic, is now seeing many of its residents move out. According to data published by Pods, Austin will be the fifth city in terms of moves in 2024.
However, the main challenges persist with rising property prices and high mortgage rates. While mortgage rates are at record highs not seen since the turn of the century, according to the April ICE House Price Index, the average home value has increased by 50% since the start of 2020, which is more growth than in any other decade since the 1980s.
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This item Housing prices in pandemic-era boom cities to collapse as prices fall originally appeared on Benzinga.com
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