Prices Stall as Inventory Piles Up
Once-booming housing markets in Florida & Texas hit a snag. Is this the end of the surge? Homebuyers across the country are facing a familiar foe: a lack of listings. Many homeowners, locked in with historically low mortgage rates, are reluctant to sell. But in the Sunshine State and the Lone Star State, a different story is unfolding.
A recent report by Redfin, a real estate brokerage, reveals a surge in housing supply in several Florida metros. This March saw a 50% jump in listings compared to the previous year. This trend is attributed to a combination of factors: increased construction and shifting affordability dynamics.
Redfin’s report, encompassing 85 major U.S. metropolitan areas with populations exceeding 750,000, paints a contrasting picture for Florida and Texas. While the nationwide trend leans towards limited inventory, these Sun Belt states are experiencing a glut. The good news for homebuyers struggling with rising mortgage rates and skyrocketing prices is a potential easing of the affordability squeeze.
According to Daryl Fairweather, Redfin’s chief economist, the Sun Belt’s construction boom is a response to the recent surge in migration. However, the report also highlights a downside: many of these new listings are lingering on the market, leading to stagnant prices.
Housing supply has increased the most in the following five metro areas, on a year-over-year basis, according to Redfin:
Cape Coral leads the pack with a whopping 51% year-over-year increase in listings, followed closely by North Port-Sarasota (48%), Fort Lauderdale (30%), and Tampa (29%). Even Texas’ McAllen market saw a jump of 25%.
| Metro | Year-over-year increase in supply |
|---|---|
| Cape Coral, Fla. | 51% |
| North Port-Sarasota, Fla. | 48% |
| Fort Lauderdale, Fla. | 30% |
| Tampa, Fla. | 29% |
| McAllen, Texas | 25% |
This surge in supply comes amidst a noticeable decline in buyer demand. Local real estate agents paint a picture of a dramatic shift from the competitive frenzy of just two years ago. Eric Auciello, a Tampa-based Redfin sales manager, highlights North Port as a prime example. “It was a dream location for remote workers seeking affordability,” he says, “but the shortage of homes has vanished, and so has the intense competition.”
Auciello goes on to suggest a potential correction in overheated markets, particularly Sarasota. “Years of inflated prices seem to be catching up,” he remarks, implying a return to a more balanced market.
“Just two short years ago,” he says, “North Port was a red-hot market – a haven for remote workers seeking affordability. Now, with a glut of homes on the market, the competition has vanished.” Auciello even suggests a potential correction in previously overvalued markets like Sarasota, hinting at a return to a more balanced market.
This surge in supply is coupled with a rise in price cuts. Metro areas like North Port-Sarasota (48%) and Tampa (44%) are seeing a significant portion of listings drop their asking price. This trend suggests a shift in power dynamics, with buyers potentially gaining some negotiating leverage.
| Metro | Share of listings with a price cut |
|---|---|
| North Port-Sarasota, Fla. | 48% |
| Tampa, Fla. | 44% |
| Indianapolis, Ind. | 43% |
| Cape Coral, Fla. | 41% |
| Denver, Colo. | 37% |
Beyond the national lock-in effect of low mortgage rates, Florida faces unique challenges that are pushing some homeowners to reconsider ownership. According to Redfin’s chief economist, Daryl Fairweather, rising homeowner association fees, maintenance costs, and particularly, soaring insurance premiums are putting a strain on affordability.
“Florida homeowners pay the most for insurance in the country,” Fairweather explains, citing a projected average annual rate of over $11,000 – a stark contrast to the national average of $2,500. These rising costs are forcing some homeowners to confront the math, and for some, selling their property becomes a more attractive option.”
So, is a price crash imminent? Not necessarily. While Florida sees the most price drops, Fairweather suggests a market correction rather than a complete collapse. Additionally, lower mortgage rates could entice new buyers despite the cost burdens. However, the long-term impact of these rising ownership costs remains to be seen.
Nationally, the situation is a mirror image. New listings are down, and existing homeowners, locked into historically low rates, are reluctant to sell. This dynamic has pushed the median home sale price up 5% year-over-year, creating a scenario where buyers face limited options and potentially higher prices.
March Market Movers: National Trends with Local Flavor
This data in the came from a list of 85 U.S. metro areas with populations of at least 750,000. Select metros may be excluded from time to time to ensure data accuracy.
New Listings: Looking to buy? Head to California’s golden triangle! Sacramento, San Jose, and Las Vegas saw the biggest jumps in new listings compared to last year, with increases of 20%, 18%, and 15% respectively. On the other hand, if you’re selling, some cities might offer a tougher market. Boston, Rochester, and Atlanta saw the biggest drops in new listings year-over-year.
Closed Sales: While overall sales dipped slightly, a few cities bucked the trend. San Jose, Milwaukee, and Tulsa all saw a slight uptick in closed sales compared to March 2023. Meanwhile, Tacoma, West Palm Beach, and Grand Rapids experienced the biggest decline.
Competition: Bidding wars may still be a reality in some areas! San Jose takes the crown for the most homes selling above list price at a whopping 72%. Rochester and Oakland also saw a high percentage of homes exceeding asking price. However, for buyers looking for a more balanced market, North Port, West Palm Beach, and Cape Coral might be interesting options, with a much lower share of homes selling above list price.
Speed of Sale: Hoping for a quick sale? Rochester takes the cake! An impressive 82% of homes under contract went off the market within two weeks. Seattle and Grand Rapids also boast speedy sales, with a high percentage of homes going under contract within two weeks. If a leisurely browsing experience is more your style, Honolulu, Tucson, and McAllen might be better choices, with a lower percentage of homes selling quickly.
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