Rare Buying Opportunity Coming to Housing Market as Prices Set to Drop
Homes in some pandemic boom towns are as much as 30% overvalued, one real estate analyst estimates, paving the way for a rare buying opportunity
Housing MarketReal EstateBuying OpportunityPandemic Boom TownsSouthern Real Estate MarketReal Estate NewsJul 20, 2024
Gerli thinks the Southern real estate market is in a bubble on the verge of bursting. Home prices in the region have climbed significantly during the pandemic, but are now seeing waning demand and a surge in housing inventory about to come online. He predicts a 20% price decline in the region over the next few years, with as much as 15% potentially occurring over the next 12 months.
The Southern housing market is particularly vulnerable due to its pandemic-fueled construction frenzy. New housing inventory in the South has climbed to around 299,000 as of July, the highest level ever recorded. However, demand in the region is now starting to sag, with home sales stagnating in key states like Florida.
The result could be a steep supply-demand imbalance in the region, pushing prices lower. Gerli notes that the situation bears similarities to previous housing bubbles, with home prices shooting up 50%-70% since the pandemic, while incomes have only risen 10%-20%.
The US economy also remains on uncertain footing, with the possibility of a recession or rising unemployment rates that could dent homebuyer demand. Gerli predicts that home prices have already begun dropping in key metros in the South, with Florida and Texas containing seven of the 10 cities in the US seeing the largest number of price declines.
While it will take a long time for housing to become more affordable overall, Gerli believes that affordability will continue to improve as long as the market continues to see its affordability levers move in a positive direction. Homebuyers would do well to exercise patience and do their due diligence, as Gerli predicts that in two to three years, there will be a lot of good buying opportunities.
Information Reventure is a real estate analytics firm that provides data and insights to the real estate industry.
Reventure is a leading provider of real estate data and analytics, helping investors, developers, and policymakers make informed decisions in the real estate market.
Frequently Asked Questions
What is the predicted price decline in the Southern real estate market?
20% over the next few years, with as much as 15% potentially occurring over the next 12 months.
What is the current state of the housing market in the South?
The Southern housing market is seeing waning demand and a surge in housing inventory, leading to a potential supply-demand imbalance.
How does the current market compare to previous housing bubbles?
Home prices have shot up 50%-70% since the pandemic, while incomes have only risen 10%-20%, making the market similar to previous housing bubbles.
What is the impact of the economy on the housing market?
A recession or rising unemployment rates could dent homebuyer demand, leading to further price declines.
How long will it take for housing to become more affordable overall?
Multiple years of price corrections, mortgage rate reductions, and income growth will be needed for housing to become more affordable overall.
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