Housing supply in these metropolitan areas is increasing by as much as 50% – and many sellers are being forced to lower their asking prices

Four in 10 homes for sale in Cape Coral, Florida, saw their prices reduced in March, Redfin says.

Four in 10 homes for sale in Cape Coral, Florida, saw their prices reduced in March, Redfin says. – Getty Images/iStockphoto

Most homebuyers in the U.S. are experiencing a low number of real estate listings as homeowners wait to sell with low mortgage rates.

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Several cities in the Sun Belt are defying the trend.

Home listings in several Florida metros in particular soared in March, according to a new report by real estate brokerage Redfin RDFN, driven by an increase in home construction and shifts in the cost of homeownership.

The report, released Thursday, covers 85 major U.S. metropolitan areas with a population of at least 750,000.

The number of homes for sale in certain Florida urban markets rose 50% in March from a year ago. This indicates that the housing supply is increasing, according to the real estate agency. This is good news for homebuyers scrambling to pay higher mortgage rates and prices.

Supply in the Sun Belt has increased dramatically due to the increase in new construction, Daryl Fairweather, chief economist at Redfin, told MarketWatch. Developers have responded to the influx of migration in areas around the Sun Belt, she added.

Many of those homes are still on the market and prices are stagnant, the company said.

According to Redfin, housing supply increased the most year-over-year in the following five metropolitan areas:

Subway

Year-on-year increase in supply

Cape Coral, Florida.

51%

North Port Sarasota, Florida.

48%

Fort Lauderdale, Florida.

30%

Tampa, Fla.

29%

McAllen, Texas

25%

The drop in demand for homes in Florida has been dramatic, according to a local real estate agent.

“Two years ago, the North Port metro was one of the most competitive housing markets in the country because it was affordable to remote workers and there was a shortage of homes for sale, but today none of these things are true,” says Eric Auciello. said a Tampa, Florida-based sales executive at Redfin.

“Sarasota in particular has been overvalued for decades and the chickens are finally in place,” he added.

The increased supply is also forcing more homeowners to lower their asking prices. The metropolitan areas with the highest share of listings with a price reduction include:

Subway

Share listings with a price reduction

North Port Sarasota, Florida.

48%

Tampa, Fla.

44%

Indianapolis, Ind.

43%

Cape Coral, Florida.

41%

Denver, Colo.

37%

Another reason why supply is exceeding demand in the Florida market in particular is due to homeowners experiencing issues with insurance premiums, higher homeowners' association fees and maintenance costs, Fairweather said.

“So the lock-in effect of mortgage rates becomes a smaller part of the decision-making process to continue owning or selling,” says Fairweather.

As climate change increases the frequency and intensity of natural disasters, hurricanes and floods, many insurers have increased prices to reflect the higher level of risk. Homeowners, in turn, see their premiums rise.

Florida homeowners pay the most for home insurance in the USwith an average annual rate of $11,759 expected by 2024 – significantly higher than a projected national average of $2,522.

Will house prices crash in these metropolises? Florida is seeing the most price declines, so the market appears to be correcting, Fairweather says, but demand isn't drying up completely.

Lower mortgage rates could also lead to more homebuyers entering the market, even as the cost of homeownership remains a challenge in the state.

It is fair to say that the dynamics of the housing market at national level could not be more different.

New listings nationwide fell 6.3% in March, compared to the previous month, according to Redfin. Many homeowners are unwilling to sell their homes, prolonging the lock-in effect, as their mortgage rates are well below the current 7%.

The average home sale price in the US rose 5% year over year to $420,357 in March. Only 16% of homes for sale nationwide were reduced in price.

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