Across the American South, “for sale” indicators are becoming common as a surge in unused home construction collides with cooling demand, leading to a real estate government screaming “giant housing bubble” that is preparing to burst. Burst.
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Nick Gerley, CEO of ReVenture Consulting, raised eyebrows by issuing an ultimatum on Twitter this day, X. “The number of new homes for sale in the South has increased by nearly 300,000,” he wrote, citing information from the U.S. Census Bureau. “This is the highest level ever – even higher than the previous bubble peak in August 2006.”
Gerli’s research, according to Reventure’s proprietary information, is of great concern to the region grappling with the consequences of the pandemic-era. They claim that home costs in Tennessee, Georgia and Florida are estimated to be 30% higher than their long-term norms. That overvaluation and a bright rise in stocks lay the foundation for his bubble theory.
During the pandemic, the South saw an influx of remote workers looking for more space and lower costs. Developers talked about a flood of unused buildings, however, as demand increased as the pandemic subsided.
According to Gerli, this is resulting in a glut of stocks that is pushing the market lower. “‘Months of supply’ on builder lots in the South has increased to nearly nine months,” he said, which is coming closer to the observable threshold than the 2008 housing strike. The months of supply metric represents how long it would take to sell all available homes at the stream gross sales rate.
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Adding to the concern, Gerley said unused home sales in the South have fallen below pre-pandemic levels despite an increase in construction. He additionally discussed that active stock increases and price gouging are increasing in Florida and Texas, with similar incidents increasing in Tennessee, Georgia, and South Carolina.
On the other hand, not all housing professionals now share Gerley’s apocalyptic vision. Mark Fleming, chief economist at First American Financial Co., offers a more sober view, saying a significant price decline is unlikely due to a fundamental imbalance between supply and demand. “There is generally not enough supply,” Fleming told Bankrate. “There are more people on the housing list than there are. It’s Econ 101.”
Dave Liniger, founder of real estate brokerage RE/MAX, notes the possibility of another growth cycle when loan rates finally come down, leaving the pent-up demand of potential patrons with an entire future.
While some once-hot markets like Austin, Texas, are currently seeing price declines, Lawrence Yun of the National Association of Realtors (NAR) sees negligible chances of a wide-scale price decline, noting that “prices “will remain stable and will not decline at the national level.”
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Current stock levels and price cuts in southern states such as Florida and Texas remain at record highs across many disciplines, suggesting a market in flux rather than sustained decline.
But Gerley says the writing is on the wall. He notes speculative buying during the pandemic, especially in builder communities, as a factor that could exacerbate any downturn. “Now, many of those investors are being forced to sell,” he warned.
Gerley’s research suggests a possible recession. With much of the South’s economy driven by construction, remote painting, and tourism, a financial downturn could exceed the region’s housing market.
In many towns the value of homes already worth seeing has declined. According to GoBankingRates, San Antonio leads the way with a 4.6% year-over-year decline, pushing the median home price from $320,500 in Q1 2023 to $305,800 in Q1 2024.
Cape Coral, Florida, declined 4.4% from $434,000 to $415,000. Panama Town, Florida saw a 3.8% reduction, with Speed Baton Rouge, Louisiana and Shreveport, Louisiana seeing much smaller declines of 1.1% and zero.9%, respectively.
Alternative Southern city views come with price discounts Myrtle Seaside, South Carolina (-0.6%), Austin, Texas (-0.3%), and Crestview, Florida (-0.2%).
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Real Property This text The government says a ‘big’ bubble has developed in the housing marketplace, and it’s ‘about to burst’ first appeared on Benzinga.com.
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