Florida Housing Downturn "Keeps Getting More Intense By The Day"
The housing market is shifting from a shortage of homes for sale to one with increasing inventory levels. Supply is rising for both new and existing homes. This added supply and high mortgage rates will likely put pressure on sky-high home prices.
Drilling down into the inventory story, Nick Gerli, CEO and Founder of real estate analytics firm Reventure Consulting, pointed out on X that all eyes should be on the "Florida housing downturn" because it "keeps getting more intense by the day."
Gerli noted housing inventory across the Orlando metro area has spiked to levels not seen since 2007.
"With active listings skyrocketing 82% over the last year. To 10,759 homes on the market. That's the highest level of supply since at least 2017. Suggesting: home prices will be going down in Orlando. And potentially by a lot," he said.
Housing inventory in Orlando is now spiking like it's 2007.
— Nick Gerli (@nickgerli1) July 22, 2024
With active listings skyrocketing 82% over the last year. To 10,759 homes on the market.
That's the highest level of supply since at least 2017.
Suggesting: home prices will be going down in Orlando. And potentially… pic.twitter.com/OzY3BIQjD7
The analysts warned:
"This Florida housing downturn keeps getting more intense by the day. With a combination of investors, builders, and inflation-burdened homeowners off-loading houses at a historically fast clip. This increase in listings is now corresponding with a slowdown in demand, which is pushing inventory levels through the roof."
1) This Florida housing downturn keeps getting more intense by the day. With a combination of investors, builders, and inflation-burdened homeowners off-loading houses at a historically fast clip.
— Nick Gerli (@nickgerli1) July 22, 2024
This increase in listings is now corresponding with a slowdown in demand, which is…
With inventory rising, he said home values in Orlando are 28% overvalued compared to their long-term averages using data from Reventure.
"That's a similar level of overvaluation to the previous peak in mid-2000s," he said, adding, "The more that inventory climbs, the greater the likelihood that prices fall."
2) The more that inventory climbs, the greater the likelihood that prices fall.
— Nick Gerli (@nickgerli1) July 22, 2024
Especially given the heavily overvalued home prices across Florida today.
For instance - home values in Orlando are currently 28% overvalued compared to their long-term norms acc to data on… pic.twitter.com/xmIEcE1oC7
He lists the ten most overvalued housing markets across the Sunshine State.
Last month, Gerli said Austin, Texas' housing inventory has "now spiked to the highest level on record. He said, "Values down nearly 20% already and could have another 15% decline to go."
The downturn in Austin, TXs housing market is remarkable.
— Nick Gerli (@nickgerli1) June 21, 2024
Inventory has now spiked to the highest level on record.
More than 25% higher than the previous, pre-pandemic high.
And the listings just keep coming.
Values down nearly 20% already and could have another 15% decline… pic.twitter.com/Jb8UOSZG0A
Low inventory has plagued the overall US housing market in recent years, but the US existing home sales inventory shows a nearing reversal. This also comes as the number of news stories featuring 'housing inventory' in corporate media has spiked to record highs.
High mortgage rates and rising supply are needed in the second half to reverse sky-high housing prices. However, if the Federal Reserve's cutting cycle begins in September or the end of the year, a lower rate environment could drive demand, pushing prices higher. A continuation of higher rates for longer periods, with rising inventory, would likely begin to pressure home prices.