Key facts
- Struggling real estate markets in Texas and Florida are showing signs of a comeback.
- Year-over-year price declines are slowing or reversing in these Sun Belt metros.
- Housing inventory is shrinking, giving sellers more leverage.
- Austin, Texas, is now considered 'fairly priced' by John Burns Research and Consulting.
- Homebuilders are still working through excess inventory and offering deals.
Real estate markets in the Sun Belt, particularly in Texas and Florida, which experienced a significant boom and subsequent downturn, are now showing early indications of a recovery. After a period of rapid price increases followed by sharp declines, year-over-year price drops are moderating, and in some areas, prices are beginning to rise again. The shrinking pool of available homes for sale is also creating more urgency for buyers.
However, the recovery is not yet robust. Markets like Houston, Dallas, and Tampa still show prices slightly below last year's levels. Homebuilders are actively clearing existing inventory, often through price cuts and incentives, while some desperate sellers are exploring rental options. Economists remain cautious, describing the current market bottom as a 'caveat-laden whisper' after several false starts.
Despite the cautious outlook, there are positive signs. Rick Palacios Jr., Director of Research at John Burns Research and Consulting, recently purchased a home in the Austin area, viewing it as an opportunistic time to buy. His firm's analysis indicates that Austin is now the only large metro area considered 'fairly priced' based on housing costs relative to incomes, unlike Indianapolis, Philadelphia, and Chicago, which are deemed 'very overpriced.' Sun Belt cities like Tampa, Houston, and Dallas are considered moderately overpriced.
Strong underlying fundamentals, including job growth and migration, continue to support demand in Southern metros. The primary challenge has been absorbing the excess supply, which is now decreasing. John Burns found that unsold inventory held by homebuilders in Florida and Texas has fallen significantly from their peaks.