Zillow’s September market report it has something more interesting to say than we already know.
What we already he knew that, yes, while mortgage rates are still elevated, even after the latest Fed decision, the year-to-year change is returning buyers and sellers across the country. What many our he didn’t wait is something that, as indicated by the data collectionmade to report, the top consumer markets come mostly from the South and Southeast, a big a reversal from the trends we have seen over the past four years.
According to the report, “while the housing market across the country is neutral,” number of municipalities in Florida, Georgia, Texas, Tennessee, and Louisiana are “buyer-friendly.” Florida’s inclusion will surprise no one at this point: Enough said about its unique—and challenging—real estate landscape that makes life difficult for buyers and sellers in the Sunshine State.
But what about other areas in the South and Southeast? What is driving the buyer’s market conditions in these metro areas? More importantly, can investors trust that these conditions will remain the norm for the long term, or is this a market volatility that will quickly return to high competitiveness?
New Construction Pays
If you’ve been following along here, you know we don’t like to attribute market-wide shifts to one cause. Often, a more accurate way to describe what is happening in any given market is that several factors combine to give you one direction or the other.
So, although all housing market reports point to the recent drop in interest rates as the reason why (some) housing markets are heading towards a more balanced state, this is not the only or mainthe reason why this happened. Instead, what we see in many key metro areas in the South, including Austin again San Antonioin Texas; New Orleans; NashvilleTennessee; again Atlantaa combination of a dramatic increase in home construction and a long-overdue change in attitude among retailers.
In terms of housing, it really pays to rebalance the market, and there is a clear correlation between more homes being built and markets that favor buyers. The most recent new construction report from researchers at Construction Coverage points to Austin-Round Rock-San Marcos, Texas, as the market that builds more new homes than any other state in the US Nashville, San Antonio, and Atlanta are all in the top 15. And these are all currently consumers. markets, according to Zillow’s latest market heat index.
Daniel Cabrera, owner and founder of Sell My House Fast SA TX, agrees that new construction has been big factor in the shift in Southern markets: “It’s created an increase in resale homes and provides bargaining power to buyers,” he told BiggerPockets.
New Orleans is the best here. The real estate market in this metro continues to rely on its historic appeal. Not much New construction is a thing we continue here: Louisiana is No. 15 on the list of states with the lowest construction costs, according to researchers at Construction Coverage.
New Orleans is not immune from the rest of the country Home insurance crisis grips Louisiana. The situation is very similar to Florida to cities in Texas or somewhere like Nashville.
Retailers’ attitudes are changing
You may have noticed that many consumer markets are now in places where only three years ago they were experiencing unprecedented market growth. Austin’s incredible growth is something with now for the fake story: It was one of the hottest housing markets in the pandemic. And it seems that, in Austin at least, home sellers have just unwilling to let go of that sense of the balance of power firmly in their favor. As recently as July of this year, Austin remained a neutral market despite months of inventory growth and slow sales.
An article about KXAN he explained the situation by saying that traders are “stuck in the market psychologically”. that it will no longer exist.” Austin Board of Realtors economist Dr. Clare Knapp said in the article, “That’s probably a product of what we saw during the violence in the homes indeed flying off the shelves. We still see remnants of that mentality in retailers.”
It took a few months, but eventually they sold locally it started showing more flexibility, lowering price expectations. Since mid-September, Austin has been one of the top metro areas where retailers are reducing their prices, according to the report. Realtor.com. Actually, 25% of listings were showing reduced prices, whichof course, it has a reassuring effect on buyers who get a clear signal that the market is cooling.
Other consumer markets show similar patterns, with Realtor.com data showing 17.4% of homes sold at reduced prices in Nashville and 17.5% in Atlanta. In contrast, a strong seller’s market like Buffalo, New Yorkit had only 10.8% of properties sold at reduced prices.
Even as mortgage rates drop, retailers in Northeast cities continue to benefit from the inventory shortage. It is unlikely that their mindset will change in the same way as the Southern merchants in the near future.
What Can Investors Expect?
If you’re lured by the prospect of casting your net in the seemingly less competitive South, you might be in luck, but you’ll still have to do your bit. local research.
Brandi Simon, real estate investor to work of Dallas-Fort Worth in the area, tells BiggerPockets that his current experience is that “buyers have a little bit more now, but it’s still neighborhood-specific. Well-priced properties in great locations are still selling. It’s better to downgrade than to switch completely to a buyer’s market.”
In other words, premium and competitive areas that can stay for a long time. indeed, it it may be less easy to find foot in the door in these markets. ”I see few tender wars,” said Simon. “For investors like me, the opportunities are there—especially in depressed areas.” Homes in desirable locations are still going to sell, but investors may be feeling a little hotter About asking prices.
That’s right now. The balance of supply and demand will not remain the same for long in these areas. The most likely scenario is that a new influx of consumers will recreate the competitive landscape.
Robert Washington, an investor-focused broker at The Tampa/St. Petersburg in the area, tells BiggerPockets that the buyer’s market situation in the South will be “short-lived,” because “as mortgage rates come down to close to 6%, we’ll start to see buyers who have been sitting on the sidelines come back into the area.” in the market.”
As for Washington, the Sunbelt operation isn’t over yet: “I feel like there’s a lot of demand for people who are still planning to move to the South from places like the Northeast and the West.”
Moving to South Africa is probably a long term trend be so temporary reductions in home prices, high interest rates, and shrinking inventory in previous waves of that move. If you can stay ahead of the next wave, you will reap the benefits of a buyer’s market situation. Don’t expect those conditions to last long.
Final thoughts
If you have ever been I think investing in the South, now definitely time to do a deliver. With new construction progress in Texas, Tennessee, and Georgia and real estate salespeople’s attitudes big metros in those states, you have a better chance of finding investment properties at a better price—before competition increases once and from a new wave of consumers.
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A Note About BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BiggerPockets.
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