A significant shift is underway in the US housing market, particularly in California and the Sun Belt regions, where inventory levels are surging to unprecedented heights. According to recent data, California’s active listings have reached a five-year high, with a staggering 41% increase from last year, totaling 61,000 listings in September. This dramatic upswing is mirrored across the South, where inventory has swelled to 493,000 listings, merely 8% shy of pre-pandemic levels.
Industry experts point to areas such as San Diego, Stockton, Modesto, and Oxnard in California, as well as Florida, Texas, Tennessee, and Georgia, as hotspots experiencing notable supply increases. This surge in inventory comes as sales volume plummets, with the California Association of Realtors reporting August 2024 sales among the lowest on record for the month.
The impact is already being felt in certain Florida markets, where price corrections are underway. Cities like Cape Coral, Lakeland, Tampa, and Crestview are seeing condo owners slash prices by up to 40% due to impending repair costs resulting from new state legislation.
Adding to market pressures, the average down payment for US homebuyers has reached an all-time high of $67,500, according to Redfin. Buyers are putting down larger percentages – typically 18.6% of the purchase price – to offset high mortgage rates.
Property-data firm Attom has identified over 50 counties across America at risk of a housing price crash, with California, New Jersey, and Illinois having the highest concentration of vulnerable markets. The New York City metro area also shows signs of vulnerability, with Kings County (Brooklyn), Richmond County (Staten Island), and Bronx County, along with four suburban New Jersey counties, among the areas considered most at risk.
As inventory continues to climb and sales remain sluggish, the next several months will reveal whether these warning signs translate into price corrections in some of the nation’s hottest housing markets.
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