The southeast housing market has experienced notable changes in recent months. As affordability concerns and increased inventory impact demand, certain metro areas within the region are seeing declining home prices. Particularly, markets in Texas, Florida, and Louisiana have shown a marked shift, with some experiencing mild price corrections. This article examines the six major metro areas where home prices are currently falling, highlighting trends that signal changes in the Southeast housing market.
Cooling Markets in the Southeast
Over the past year, U.S. home prices have softened, particularly in regions of the Southeast housing market. According to data from the Zillow Home Value Index, this fall has brought a further slowdown in price growth, extending beyond typical seasonality. The national month-over-month decline in home prices from August to September 2024 reflects a broader cooling trend, with certain Southeastern markets leading the way.
In markets like New Orleans, Los Angeles, and Austin, TX, year-over-year home prices have fallen by as much as 4.0%. Other cities such as San Antonio, TX and Tampa, FL have also experienced notable declines, signaling a larger trend across the region. Factors contributing to this decline include rising inventory levels, reduced migration patterns, and affordability challenges, which have caused homes to sit on the market longer, resulting in price drops.
Factors Driving Price Declines
Several factors have contributed to the current shifts in the Southeast housing market. One of the primary reasons is the slowdown in migration that previously fueled demand in many Southern states. During the height of the pandemic, states like Texas and Florida saw a surge in people moving from more expensive areas, driving up home prices. However, this trend has reversed as more people settle in place or explore different regions.
Additionally, affordability remains a significant challenge. In many parts of the Southeast housing market, home prices have stretched far beyond local incomes. This affordability gap, coupled with rising home insurance costs, has made it difficult for potential buyers to enter the market, causing demand to decline.
Finally, the region’s significant homebuilding activity has contributed to a rise in inventory. Markets with large numbers of newly built homes, such as Jacksonville, FL, are experiencing price corrections as the supply outpaces demand. This influx of new construction has further weakened prices, particularly in areas that saw high levels of speculative building.
Metro Areas with the Largest Declines
The six major metro areas where home prices are currently falling include:
- New Orleans, LA: Home prices dropped 4.0% year-over-year, with a 14.4% decrease from the 2022 peak.
- Austin, TX: Prices fell by 4.0%, with a significant 20.4% decline since the 2022 peak.
- San Antonio, TX: A 2.7% year-over-year decline, with a 6.8% drop from peak levels.
- Tampa, FL: Home prices have decreased by 0.5% year-over-year, with a 2.1% drop from the peak.
- Jacksonville, FL: Prices fell by 0.3% year-over-year, and 2.9% from their 2022 peak.
- Dallas, TX: A 0.3% year-over-year decline, with a 4.4% drop from the 2022 peak.
These markets, which were once experiencing rapid price increases, are now facing corrections due to the combination of high inventory, reduced demand, and strained affordability.
What’s Next for the Southeast Housing Market?
As the Southeast housing market continues to cool, it’s likely that we will see further price corrections in the coming months. The decline in migration, combined with ongoing affordability concerns, will continue to impact demand, particularly in metro areas with high levels of new construction. However, experts expect that price growth may return in certain areas by the spring of 2025, as inventory stabilizes and demand begins to recover.
This trend serves as a reminder that real estate markets are highly regional, and the factors driving price changes in the Southeast housing market may differ from those in other parts of the country. Homebuyers and investors should stay informed and closely monitor local trends to make well-informed decisions. The data and insights for this article have been sourced from Lance Lambert’s ResiClub housing market analysis on FastCompany.com.
