Home Prices Are About to Fall if You Live in These States
The US housing market is splitting down the middle, with buyers scoring sweet deals in some states while getting clobbered in others. Forget a one-size-fits-all recovery — where you live decides if you’re haggling for a steal or duking it out in a bidding war.
Nationwide, the stash of homes for sale is still playing catch-up. The National Association of Realtors says January’s existing-home stock was 16% shy of where it stood five years back.
The Regional Divide
Blame homeowners clinging to dirt-cheap mortgage rates — they’ve been bolted in place, scared to trade up and face today’s pricey loans. But that grip’s loosening as life forces more folks to move, nudging supply upward.
The US housing market is experiencing stark regional differences, with some areas seeing rising inventories — like Colorado — and price cuts, while others still face supply shortages and bidding wars.
States with Rising Inventories
Texas is drowning in listings — Realtor.com pegs its for-sale pile 20% above pre-pandemic days. Florida and Colorado are swimming in extra homes too.
States with Low Inventories
Meanwhile, up in the Northeast and Midwest, it’s a ghost town — 15 states, including New Jersey and Pennsylvania, are stuck with less than half their old normal.
What’s Driving the Split?
For starters, builders went wild down south. The National Association of Home Builders clocked 118,000 unsold, move-in-ready homes last December — the fattest stack since 2009.
As migration slows, demand weakens, and affordability may improve in overbuilt markets like Texas, while supply constraints in the Northeast and Midwest are likely to keep prices elevated.
Florida and Texas: The Leaders in Supply
Florida and Texas soaked up most of that action, with permitting stats showing the Sunshine State’s housing stock ballooning 15% since 2020, Brad O’Connor, chief economist at Florida Realtors told the Wall Street Journal.
Trouble is, buyers aren’t biting. Mortgage rates are sky-high, and those shiny new builds are gathering dust, bloating inventories.
Illinois: The Supply Conundrum
Flip the script in states like Illinois, where red tape and sky-high construction costs choke new projects. Existing homes? Forget it.
The South has seen a surge in new construction, contributing to rising inventories, while strict zoning laws and high costs have limited new builds in places like Illinois.
The Mortgage Lock-In Twist
Then there’s the mortgage lock-in twist — t’s fading faster in some spots.
Down south, 21% of mortgages were at 6% or higher by Q3 last year, compared to 18% in the Northeast, Chris Porter of John Burns Research and Consulting added. This is due more homes having swapped hands in the South since rates spiked, thanks to folks still flocking there. Plus, Southerners are a tad more likely to own outright, per 2023 Census guesses — mortgage-free sellers can dodge new loans and jump ship easier.
Conclusion
Home prices are about to fall in some states, while others will continue to see elevated prices. The regional divide is driven by factors like overbuilding in the South and supply constraints in the Northeast and Midwest. As migration slows and demand weakens, overvalued homes in Sunbelt states may see prices drop, while low inventory in other areas will keep prices locked in.
FAQs
Q: What are the states with rising inventories?
A: Texas, Florida, and Colorado have surpassed 2019 inventory levels.
Q: What are the states with low inventories?
A: 15 states, including New Jersey and Pennsylvania, have less than half the pre-pandemic supply.
Q: What is driving the regional divide?
A: Overbuilding in the South, supply constraints in the Northeast and Midwest, and changing mortgage rates are driving the regional divide.
Q: Will prices fall in overbuilt markets?
A: Yes, as migration slows and demand weakens, overvalued homes in Sunbelt states may see prices drop.
Q: Will prices remain elevated in other areas?
A: Yes, low inventory in states like the Northeast and Midwest will keep prices locked in.
