Rare Buying Opportunity Emerges as Housing Market Prepares for Price Drop
Southern states are experiencing a housing bubble, with prices expected to drop 20% in the next few years, according to Reventure CEO Nick Gerli.
Housing MarketReal EstateNick GerliReventureSouthern StatesReal EstateJul 20, 2024
This decline is expected to occur due to waning demand and a surge in housing inventory in the region. The South has seen a construction frenzy during the pandemic, with new housing inventory reaching an all-time high of 299,000 as of July. However, demand in the region is now slowing down, 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 predicts that home prices in the South could drop by as much as 20% over the next few years, with a 15% decline potentially occurring over the next 12 months. While this decline alone may not make the housing market more affordable, it could put homebuyers on the path to a good opportunity in a few years' time, assuming price declines continue, mortgage rates keep falling, and incomes in the South keep rising.
Gerli notes that the situation in the South's housing market bears some similarities to previous housing bubbles. In key boom towns, home prices have shot up 50-70% since the pandemic, though incomes have only risen 10-20%. This makes Sun Belt states around 30% overvalued, a bubble that could easily be popped by the sharp rise in inventory coming online.
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.
Information
Reventure is a real estate analytics firm that provides data-driven insights to the real estate industry. Nick Gerli is the CEO of Reventure and has extensive experience in the real estate industry.
Reventure is a leading real estate analytics firm that helps industry professionals make informed decisions with its data-driven insights. With a strong track record of predicting market trends, Reventure is a trusted source of information for real estate investors, developers, and policymakers.
Frequently Asked Questions
What is the predicted price decline in the Southern housing market?
According to Nick Gerli, CEO of Reventure, home prices in the South could drop by as much as 20% over the next few years.
What is causing the housing bubble in the South?
The housing bubble in the South is caused by waning demand and a surge in housing inventory in the region.
Which states are seeing the largest number of price declines?
Florida and Texas contain seven of the 10 cities in the US seeing the largest number of price declines, according to Redfin.
How long will it take for housing to become more affordable overall?
According to Gerli, it will take a long time for housing to become more affordable overall, given how overvalued the market is.
What are the affordability levers that need to move in a positive direction?
According to Gerli, the affordability levers that need to move in a positive direction include price corrections, mortgage rate reductions, and income growth.
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