Florida and Texas - are experiencing an oversupply of homes

 

Despite the nationwide housing shortage, two states - Florida and Texas - are experiencing an oversupply of homes, leading to a decline in demand and prices. According to Redfin, these states accelerated construction to meet the surge in demand during the pandemic, but now many would-be buyers are priced out of the market.

In Florida, cities like Cape Coral and North Port have seen a significant increase in homes for sale, with a 50% surge in inventory compared to last year. Similarly, McAllen, Texas, has experienced a 25% jump in available homes. This oversupply has led to a shift away from these areas, with buyers seeking more affordable options elsewhere.

Eric Auciello, a local Redfin sales manager, noted that North Port, once a highly competitive market, is now seeing a decline in demand due to affordability issues. "Out-of-town homebuyers no longer see Florida as a place to get amazing value," he said. "Now they're moving to North Carolina or Tennessee to get a good deal."

Adding to Florida's challenges is a growing insurance crisis, with rising costs and changing coverage affecting nearly three-quarters of homeowners. This has become a national concern, as climate risks drive up insurance premiums and reduce coverage in certain areas, potentially eroding home values.

Both Florida and Texas are also grappling with the same issues affecting the broader housing market. High mortgage rates, currently around 7%, are deterring many homeowners from upgrading to better homes. Nationally, this has led to a 6% drop in new listings month-over-month in March, the largest decline since January 2022.

Despite the oversupply in Florida and Texas, the median US sale price has risen 5% year-over-year to $420,357, just 3% below the record high of $432,496. This highlights the ongoing housing shortage and the challenges faced by buyers seeking affordable options.

In summary, while the US faces a housing shortage, Florida and Texas are experiencing an oversupply of homes, leading to declining demand and prices. This shift is driven by affordability issues, rising insurance costs, and broader housing market challenges. As the market continues to evolve, it remains to be seen how these states will adapt to the changing landscape.