While home prices are still rising across the U.S., driven by an ongoing supply shortage, in the two states with most of the new construction approvals in recent years—Florida and Texas—buyers are finally getting the upper hand.
A new report by Redfin found that five of the six metropolitan areas where home prices fell the fastest in February were in Florida and Texas. These included Austin, Texas; Tampa, Florida; San Antonio, Texas; Houston, Texas; and Jacksonville, Florida.
Newsweek contacted Redfin for comment by email on Monday morning, outside of standard working hours.
Why It Matters
Both the Florida and Texas housing markets boomed during the pandemic, as the rise of remote work led to an influx of new residents moving in from out of state, attracted by sunny weather and a relatively cheaper cost of living.
These new residents brought up demand at a time when the two states, like the rest of the country, were facing a historic lack of inventory. Since then, both Florida and Texas have built more new homes than anywhere else in the union—but the situation is no longer the same as during the pandemic.
In-migration has slowed down significantly, some workers had to go back to their states of origin, and many Floridians are being priced out by rising homeowners association (HOA) fees, property insurance premiums, and other housing costs. As a result, home prices are now falling in some of the most overheated markets during the pandemic.
What To Know
According to Redfin, these were the U.S. metros where the median sale price of a home was falling fastest in the country in February:
- Austin, Texas: -2.7 percent year-over-year
- Tampa, Florida: -1.9 percent year-over-year
- San Antonio, Texas: -1.7 percent year-over-year
- Houston, Texas: -1.5 percent year-over-year
- Atlanta, Georgia: -1 percent year-over-year
- Jacksonville, Florida: -0.8 percent year-over-year
By comparison, at the national level, the median home sale price of a home was up 3.2 percent in February compared to a year earlier, to $425,421.
The growth in inventory in many areas of Florida and Texas is turning these markets in favor of buyers. That’s especially true in the case of Texas; in Florida, homes for sale are also piling up on the market as a result of residents trying to offload properties they can no longer afford because of the growing risk of natural disasters, rising HOA fees, and home insurance premiums.
Florida and Texas were also the states where homes for sale took the longest to go under contract in the country, Redfin found. While the typical U.S. home was sold after 54 days on the market, it took an average 94 for a home in Miami to go under contract—the longest of all major U.S. metro.
Next came West Palm Beach, Florida, with 92 days; Austin, Texas, with 91 days; Fort Lauderdale, Florida, with 91 days; and Pittsburgh, with 85 days.
What People Are Saying
Connie Durnal, a Redfin Premier agent in the northern suburbs of Dallas, said in a statement: “There are about five times more home sellers than buyers, meaning it’s a buyer’s market. That’s why I’m telling all of my sellers that it’s crucial to price their homes competitively.”
Nadia Evangelou, the National Association of Realtors (NAR) senior economist and director of real estate research, previously told Newsweek: “Higher inventory in Florida is good news for buyers because it provides more options and opportunities in a market that has been very competitive in recent years. However, it’s important to put this increase in context. While inventory levels now are better than pre-pandemic, they are rising from low levels seen during the pandemic. At the same time, demand in Florida remains very strong, driven mostly by population growth, new household formations, and high levels of migration into the state.
“As one of the fastest-growing states in the country, Florida continues to see steady buyer interest, and this additional inventory is helping balance the market. Even though home price gains have softened at the state level, we continue to see strong appreciation in metro areas like Miami and Naples, where prices have increased more than 7 percent in Miami and 10 percent in Naples year-over-year.”
What Happens Next
Housing experts said that many markets in Florida and Texas may have already turned in favor of buyers, though these may struggle to reap the benefits of these shifts.
Stubbornly high mortgage rates, which are still hovering around the 7 percent mark and are expected to remain above 6 percent through 2025 and 2026, are making buyers skittish about purchasing properties—forcing sellers to slash prices in an attempt to convince them to close the deal.
Additionally, in Florida, other rising costs linked to housing are making the decision of buying a home trickier than they used to be. Experts, however, said that price declines are part of a “correction” of these overheated markets rather than the telltale signs of a looming crash.
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