Real eState

‘Massive’ Housing Bubble About to Burst in Southern states of the U.S.

Published

4 months ago

July 10, 2024

The supply of new homes in Southern states of the U.S. has grown substantially potentially creating a bubble in the housing market, a real estate analyst suggested on Monday.

Home builders in the region responded to heightened demand for homes during COVID by escalating construction. Americans had migrated to the South during the pandemic in search of cheaper housing after stay-at-home orders to slow the spread of the coronavirus gave them flexibility over where they could work. That trend is slowing now, leading to waning demand for homes.

One analysts suggest that a drop in demand has left many homes in the market, creating a potential bubble.

“A massive housing bubble has developed, and is about to pop, in the South. The number of new homes for sale in the Southern Region (FL, GA, TN, TX, etc.) has spiked up to nearly 300,000,” Nick Gerli, CEO of Reventure Consulting, said in a post on X, formerly Twitter. “This is the highest level of all-time. Even higher than the previous bubble peak in August 2006. Before the massive crash.”

A massive housing bubble has developed, and is about to pop, in the South.

The number of new homes for sale in the Southern Region (FL, GA, TN, TX, etc.) has spiked up to nearly 300,000.

This is the highest level of all-time. Even higher than the previous bubble peak in August… pic.twitter.com/bVB9vCQl4I

— Nick Gerli (@nickgerli1) July 8, 2024

Newsweek contacted Gerli for comment via phone text message on Monday.

Gerli went on to suggest that the COVID-inspired demand led to high prices that are now declining with the dropping demand for homes.

“I know this sounds very bearish on Southern real estate. But ultimately it’s pretty simple. Home builders and investors rampantly speculated in this housing market the last 3-4 years. And prices went far above what locals can afford. And created a bubble,” he said on X. “Now that bubble is – slowly – popping. And it could start to pop pretty fast if a Recession is thrown into the mix.”

Some housing economists are suggesting that the housing market may be normalizing after the volatility witnessed during the COVID when a combination of cheap mortgage rates and lower prices in the south attracted buyers to purchase homes.

“In our data, it is clear that the southern markets are the most normalized in Austin and San Antonio, for example, there are more homes now for sale than there were before the pandemic,” Danielle Hale, chief economist at Realtor.com, told Newsweek. “So there is greater availability in the South and we are seeing that affect pricing.”

The median listing price in Austin, for example, was down 3 percent compared to a year ago, she added.

The U.S. still needed to build enough homes and the South has done a better job than other parts of the country in supplying new homes to the market, Hale said.

“It has also attracted a lot of households from other regions of the country because homes there remain affordable,” she told Newsweek. “My expectation is that it will continue to draw in people and that its relative affordability will continue to be an advantage.”

Hale added: “So I don’t think we’re going to see a crash, but it is the case that inventory of homes for sale are less scarce in the South now than they have been over the past few years.”

Compared to the housing crash seen in the 2008 financial crisis, homeowners now boast significant equity in their homes, including in certain parts of the South.

“Historically, Florida, for example, has a high share of homeowners that own their home outright,” Hale said. “It’s the case that nationwide there’s a lot more equity in housing right now and that does make it less likely that we’ll see the kind of price declines that lead to trouble that we saw in the mid-2000s.”

Gerli acknowledged that other regions of the U.S. were seeing fewer challenges than the South.

“We won’t see a housing crash in the Northeast and Midwest. Home building there is at very low levels. As is speculative inventory activity,” he pointed out on X. “Prices in these regions are also less overvalued. And inventory is much lower.”

He added: “Perhaps there’s a housing correction eventually in Northeast/Midwest. But for now – these markets are holding strong.”

new homes — New homes have finishing touches added at a home construction site in Trappe, Maryland, on October 28, 2022. New homes for sale have grown in the South of the country.
New homes have finishing touches added at a home construction site in Trappe, Maryland, on October 28, 2022. New homes for sale have grown in the South of the country.
JIM WATSON/AFP via Getty Images

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Real eState

Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

Published

3 days ago

November 6, 2024

Anne Joseph

TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

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Real eState

Homelessness: Tiny home village to open next week in Halifax suburb

Published

2 weeks ago

October 24, 2024

Anne Joseph

HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Real eState

Here are some facts about British Columbia’s housing market

Published

3 weeks ago

October 17, 2024

Anne Joseph

Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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