This report was originally published exclusively to subscribers of Intel, Inman’s data and research division, on November 18, 2024. For more analysis on your real estate business, subscribe to Inman Intel.
In much of the United States, the trajectory of the housing market is easy to explain, at least in broad strokes.
With mortgage rates remaining high, new listings and housing transactions remain sluggish, despite signs that a modest recovery is well underway.
Inventory levels are gradually being replenished after years of low inventory.
This story is not about that tendency.
Our analysis of Realtor.com property data reveals three distinct regions where real estate brokers, agents, and customers face different challenges than other regions of the country.
This report begins on the West Coast. Expensive metropolises on the West Coast have been hit particularly hard by mortgage rates, but the path forward may be increasingly set. It then takes the reader on a journey to other parts of the country where major markets are stuck in their own alternative housing realities.
Read all the details in the full report.
1. Sleeping Giant
When a market experiences a significant increase in available inventory, it often indicates that a market slowdown is underway.
That’s not what’s been happening lately in the West Coast’s most expensive housing market.
A number of factors have converged in large cities in California and Washington that could signal better days for real estate business in what is currently one of the most stagnant residential areas in the United States. An unusual situation is occurring.
Inventories rebounded sharply even as pending sales recovered faster than most places.
Nowhere is this more evident than in San Diego. Inventories in the metro area are up 63% year-over-year, the highest in the nation. Despite this, half of San Diego homes sell within 34 days, compared to 58 days nationwide. And while that schedule is rising, it’s rising more slowly than what’s seen in other major U.S. cities.
Similar movements can be observed in other expensive West Coast subways, from Seattle in the north to Los Angeles.
daniel houston charts
This change in inventory in these cities has not coincided with a drop in prices, as one might expect, but has been surprisingly stable. And while such a strong change might normally mean a home remains unsold for a long time, homes remain on the market for a shorter period of time than in most parts of the country.
Across California, new listings rose 11% in October compared to the same month last year, but remained 18% below pre-pandemic levels. Let’s compare this to the United States as a whole. Across the U.S., new listings rose 5% year over year, but were down just 11% compared to just before the pandemic began.
To be sure, these expensive metros are still experiencing weak trading conditions compared to pre-pandemic conditions, and are likely to remain so until fares come down again.
But unlike other regions where inventories are increasing rapidly, the West Coast appears to be on a healthier trajectory from a brokerage perspective.
2. Mighty yet fall
From a pure active list perspective, Florida appears to have a lot in common with California.
But the reality of their trajectories could not be more different.
Once a hotspot for the pandemic-era housing boom, Florida is facing one of the nation’s deepest and longest-lasting recessions, with no end in sight.
Let’s start by looking at the greater Miami area.
Like other markets on the West Coast, the Miami market has seen a 57% increase in inventory for sale over the past year, making it one of the highest in the nation. But half of Miami’s homes sit for at least 74 days before being sold, which is more than twice as long as in San Diego. Half of the homes for sale in Miami had list prices per square foot down 9% in October from a year ago. This is fundamentally different from the 2% price increase observed across the country at the time, and well below the 1.7% increase sustained by California listed properties during similar inventory increases.
It’s not just Miami. Florida markets, including Tampa, Northport, Fort Myers, Orlando, and Jacksonville, roughly fit this picture to varying degrees. And they all stand out from the out-of-state housing market.
While the number of new properties in Florida is rapidly declining, the decline in sales is accelerating.
As a result, homes are sitting on the market longer and longer, inventory is ballooning, and prices are falling faster than almost anywhere else in the country.
daniel houston charts
Most of the U.S. housing market bottomed out about a year ago. The economic downturn is still in full swing in Florida.
3. Deja vu of the pandemic boom?
In most parts of the country, today’s business environment is little different from the home-buying frenzy at the beginning of the pandemic.
But some parts of the Northeast and Midwest retain some of the key dynamics that defined the pandemic boom. In particular, tight inventory, imbalances favoring sellers, and relatively stable housing transaction levels.
Nowhere in the nation is this situation more evident than in the major population centers of Connecticut.
Statewide, supply remains extremely constrained, with active listings in October 57 percent below early 2020 levels. Nationally, inventories actually increased by 3 percent over the same period. In Connecticut, new listings filed online in October were down 30 percent compared to February 2020. Nationally, the decline in new listings during this time was only 12 percent.
Amid this significant regional housing shortage, Connecticut is experiencing relatively high transaction levels despite an unfavorable interest rate environment in more expensive areas of the country.
result? A highly unbalanced environment where the number of buyers exceeds the number of sellers and prices continue to rise.
Connecticut’s three metropolitan areas, including New Haven, Hartford, and Bridgeport, rank 2nd and 3rd, respectively, among the nation’s 150 largest population centers in year-over-year growth in median list price per square foot. Ranked 8th and 8th. All three metro areas saw year-over-year price increases of more than 11 percent per square foot.
In other words, local brokers and agents are still living in much the same environment as the rest of the country experienced during the pandemic boom.
To a lesser extent, Connecticut’s experience has been emulated in some other supply-constrained metros in the same region of the country.
In the Midwest, we’re seeing similar moves in Milwaukee, Detroit, and the Ohio metros of Cleveland and Dayton, but in some cases, they’re less extreme.
The key East Coast markets of New York and Philadelphia are also notable for continuing to weather a low supply environment and strong upward price pressure.
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