Coastal Markets See Inventory Spike
“Is this a buying opportunity or market bust for FL, SC, AL, TX?”
Introduction
The latest Realtor.com Economic Research points to a cooling coastal housing market with more inventory and less urgency among buyers, resulting in longer times to sell properties.
View Full Dataset Here (This dataset is dynamic and changes every month, the cities may be different if you see the live dataset after July 2024.)
WHAT WE ARE SEEING IN THE NUMBERS.
Rising Inventory: The inventory of these coastal homes for sale see an average increase in inventory ~70% year-over-year, with Myrtle beach increasing over 117% This significant rise in inventory indicates that more homes are available on the market compared to the previous year. This is due to a variety of factors, high interest rates, increased in insurance cost and competing new construction.
Low Buyer Demand: The market strength indicator is less than 0.40, which suggests that buyer demand is very low. A low market strength typically means that fewer buyers are actively looking for homes, which could be due to high mortgage rates, economic uncertainty, or other market conditions that deter potential buyers.
Extended Days on Market: Homes are staying on the market for an average of 100 days before being sold. This extended time on the market further indicates a slowdown in buyer activity, as homes are not being purchased as quickly as they might be in a more active market.
CAUSED BY MULTIPLE FACTORS.
Market Competition: There is robust interest in new constructions, with builders offering incentives like $10K towards closing costs making it more attractive to purchase new over an older home that has been sitting on the market.
Demographics: The past few years have increased home prices and this is making it increasingly difficult for local residents to afford homes. Many locals are being priced out of the market, leading to concerns about housing affordability and community stability in these coastal areas.
Economic Factors: Higher mortgage rates are expected to impact affordability, potentially pricing out some buyers. However, this could lead to a healthier balance between supply and demand, preventing runaway price increases. If mortgage rates drop later in the year, as some experts predict, it could boost buyer activity and further stabilize the market.
Insurance Rates and Taxes: Increasing insurance rates and taxes are becoming significant factors affecting the coastal housing market. Higher costs for homeowners insurance, particularly in areas prone to hurricanes and flooding, along with rising property taxes, are adding to the overall cost of homeownership and could influence both buyer affordability and seller pricing strategies.
These trends highlight the ongoing attractiveness of coastal real estate, driven by both lifestyle factors and demographic shifts. For buyers and investors, understanding these dynamics is crucial for making informed decisions in this competitive market.
MARKET SENTIMENT.
In a Buyer's Market: The combination of rising inventory and low buyer demand suggests that the market may be shifting in favor of buyers. With more homes available and fewer buyers competing for them, buyers may have more negotiating power and opportunities to find better deals.
Pricing Reductions: Sellers might need to adjust their pricing strategies to attract buyers in a slower market. Price reductions and other incentives could become more common as sellers attempt to make their properties more appealing.
Strategic Considerations for Sellers: Sellers might consider waiting for market conditions to improve if they can afford to do so, or they may need to enhance their listings with upgrades or better marketing to stand out in a crowded market.
Overall, these indicators point to a cooling housing market with more inventory and less urgency among buyers, resulting in longer times to sell properties. If these conditions last for an excessive amount of time, these cities could see the "crash" many have been predicting over the past 2 years.
