Home Prices Begin to Soften in Pandemic Boomtowns

Austin, Texas. Daniel Kaufman Real Estate.

The real estate landscape has undergone significant changes in once-hot metros. After a surge in home prices during the pandemic, we’re now witnessing a rebalancing act. Here’s what you need to know:

Price Declines in Key Cities

According to mortgage data company ICE Mortgage, San Antonio and Austin in Texas, along with Tampa, Florida, have experienced the most substantial monthly price declines. These cities, which were among the most popular during the pandemic, are now recalibrating as more homes hit the market.

Growing Inventory Levels

The key factor driving this shift is sellers’ increased willingness to list their homes for sale. In Florida and Texas, new listings have exceeded pre-pandemic averages. Notably, eight of the nine major US markets with growing inventory levels are in these two states.

Cooling Down from Skyrocketing Prices

During the pandemic, Austin’s home prices soared by almost 70%, while San Antonio and Tampa saw increases of 40% and 60%, respectively. However, the hyper-accelerated value was unsustainable, leading to a sharp turnaround.

Supply and Demand Imbalance

The pandemic prompted many people to move to these markets for more space, but local homeowners stopped selling. As a result, available homes-for-sale plummeted, creating a significant inventory deficit. Inbound migration further exacerbated the situation.

Changing Trends

Now, active listings are on the rise. In May, Austin had 10,000 active listings, San Antonio had 11,000, and Tampa had 15,000. Homes are staying on the market longer, indicating a shift toward buyers.

Insurance Pressures and Homebuilders

Affordable property insurance remains a challenge, pressuring homeowners to sell. Severe weather events have led to higher premiums in Florida and Texas. Additionally, homebuilders are ramping up development in the South, contributing to growing inventory.

New Preferences

While many households still favor the South, moving data shows a preference for states like Tennessee, the Carolinas, and Georgia over Texas and Florida.