HOUSING MARKET ENTERING 'CRASH STAGE' IN MULTIPLE CITIES
The U.S. housing market is already entering a "crash stage" in multiple cities across the country, according to expert Nick Gerli, CEO and founder of real estate analytics firm Reventure Consulting.
Talking during a recent episode of the Thoughtful Money podcast, Gerli said that while the national housing market is still "in a record bubble," with home prices significantly higher now than they were before the pandemic, many metropolitan areas are experiencing price drops on a month-to-month basis and even year-over-year.
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"The housing market right now is very bifurcated," Gerli said. "And we actually have many cities that are entering a crash stage right now. This is what the mainstream headlines on the housing market are absolutely ignoring." Newsweek contacted Gerli for comment by email early on Thursday.
In states like Florida and Texas, which have been building the most new homes in the nation in recent years, "we are seeing a colossal spike in inventory and homes for sale," Gerli said. "We're seeing a major sell-off take place that's now causing prices to go down. And I suspect this could be the start of a very large correction," he added.
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Gerli specified that he doesn't expect to see prices drop by the same depths all across the country. "It really depends on your local market. There's certain states where I don't think home prices are gonna go down that much, New York would be one," he said, adding that the state isn't very overvalued and inventory is still very low.
"However, if your state is overvalued, and if there was a lot of speculation that occurred during the pandemic, there's a huge chance that prices are going to drop," he added.
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That's why Texas and Florida—which both saw a huge influx of out-of-state people during the pandemic relocating to the two states, boosting competition for homes and bringing up prices—are now seeing some of their markets softening.
According to Redfin's latest data, there were 200,997 homes for sale in Florida in the month of May, up 40.1 percent year-over-year. The number of newly listed homes was 48,945, up 12.5 compared to a year earlier. While the median sale price in Florida was $420,100, up 3.1 percent year-over-year, sellers in cities like Tampa and Jacksonville have seen significant price cuts in listings. Realtor.com reported that 28.6 percent of homes in Tampa saw price reductions this year, up 10.9 percentage points compared to 2023.
Only 11.7 percent of homes in Florida sold above list price in May, according to Redfin, down 4.0 points year-over-year. Over 32 percent of homes had price drops, up from 26.0 percent of homes in May 2023.
Sellers in Texas have also slashed prices in cities like Fort Worth, Dallas and Houston, as still-high mortgage rates discourage buyers at a time when new inventory floods in the state's market.
"Texas and Florida they're feeling at first, because they were kind of the most speculative markets," Gerli told Thoughtful Money's host Adam Taggart. "But yes, it's reasonable to expect that this will spread to other parts of the country, although with varying degrees of how much prices go down."
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