Florida and Texas are getting inundated with new houses, which is stagnating price growth. But that doesn’t mean people are buying.
The two states are home to eight of the 10 metropolitan areas that saw the largest year-over-year increases in supply, according to new data from real estate services firm Redfin.
Home-building really took off in Florida and Texas as people began moving to warmer climates in places with more favorable tax codes and outdoor space in the aftermath of the pandemic. Now many of these new developments are sitting empty.
In Cape Coral and North Port, Florida, for example, the number of homes for sale in March soared roughly 50% from a year earlier, the biggest increase in the country. And in McAllen, Texas, supply surged 25%, Redfin found.
Climbing home prices and high mortgage rates have put a damper on the housing market, as people prefer to stay put where they are. That has kept buyer’s hesitant to venture out into the market, with many feeling priced out.
But sellers no longer dominate the housing market, according to Eric Auciello, a local Redfin sales manager. With five Florida cities and two Texas cities among the 10 metro areas where sellers were most likely to lower their list prices, there is more wiggle room than many potential homebuyers realize.
“The sharp ascent in Florida housing prices in recent years has driven a lot of homeowners to cash in on their equity, but some of them are having a hard time adjusting to the fact that it’s a buyer’s market,” Auciello said.
His advice to sellers: “Price your home fairly; the comps from six months ago don’t exist now.”
“And if you’re a buyer, know that the odds of getting an offer accepted below market value are pretty high,” he said.
The median price of a home in Florida is $415,300, up 3.7% from last year, according to Redfin data. In Texas, the median home price grew 1.7% year-over-year, to $3444,500. Nationwide, the median home price is $420,321, a 4.8% increase from a year earlier.
And median sale prices fell from a year earlier in just three metros, one of which is in Florida (North Port-Sarasota) and one of which is in Texas: (San Antonio).
The average rate on the 30-year fixed mortgage came in at 7.43% to kick off this week, according to Mortgage News Daily’s daily data — hovering at about its highest daily level since last November.
Melissa Cohn, the regional vice president of William Raveis Mortgage, said it may still be the right time to move, despite the high mortgage rates. That’s because once mortgage rates drop, demand will surge — and so will home prices.
“If you buy now before interest rates really come down and prices go up,” Cohn told Bankrate, “you are still ahead of the game, even if you’re paying more in a mortgage payment for a short period of time.”