Katrina Campins, host of “Mansion Global,” recently sat down on “Making Money” to dissect the ever-evolving landscape of the U.S. housing market. Campins offered a sobering view: while home prices have been on a seemingly unending rise over the past three years, a growing number of markets are now teetering on the edge of a significant price correction. According to a new report from Parcl Labs, a real-estate data and analytics firm, 15 housing markets in the U.S. are “at risk” of a home-price correction in the upcoming fall and winter months.
This report, which aims to shed light on the shifting dynamics of the housing market, indicates that although there are no guarantees these markets will see a material correction, the signs of softening are unmistakable. For those eyeing to buy in these regions, the leverage game has changed dramatically. The report underscores that “at the very least, buyers in these markets have more leverage than they did a few years ago.”
Interestingly, 13 of the 15 markets flagged as “at risk” are located in Florida. Yes, the Sunshine State, known for its balmy weather and alluring coastlines, is now facing rising active housing inventory at a rather “accelerated” pace. While the state has always been a magnet for both retirees and young professionals, various factors are now contributing to this potential market correction. Skyrocketing insurance prices, fueled by weather disasters, rising re-insurance rates, and the escalating cost of home repairs due to inflation, are putting a strain on homeowners and prospective buyers alike.
Jason Lewris, co-founder of Parcl Labs, pointed out that the emerging weakness in prices, particularly in high-performing markets like Tampa and Miami, could indeed signal the early stages of a market correction in the region. Years of underbuilding have fueled a shortage of homes across the country. This problem has only been aggravated by the rapid rise in mortgage rates and the ever-increasing prices of construction materials.
And then there’s the “Golden handcuff” effect. Higher mortgage rates over the past three years have effectively locked many homeowners into their current homes, unable or unwilling to move because of the unfavorable financial terms they’d face in securing a new mortgage. This has limited the supply of homes on the market, further complicating the landscape for buyers and sellers.
So, what does this all mean for the average homebuyer or real estate investor? Well, it seems like it’s a mixed bag. On one hand, there are signals that some markets may be on the brink of a correction, offering potential opportunities for buyers. On the other hand, the factors driving these corrections—like rising insurance costs and mortgage rates—are not likely to abate anytime soon. The housing market remains a complex and dynamic field, where regional nuances can make all the difference.
As we move into the colder months, all eyes will be on these “at-risk” markets to see how they navigate the potential storm. Whether you’re a buyer, seller, or just an interested observer, it’s clear that the coming months will be critical in shaping the future of the U.S. housing market. So, stay tuned and keep those calculators handy—you might just need them.
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