Want more housing stories from Lance Lambert’s ResiClub in your inbox? Subscribe to the free, daily ResiClub recentsletter.
At the height of the pandemic housing boom in May 2022, FirstKey Homes, an institutional landlord owned by declareiveial equity firm Cerberus, bought a three-bedroom hoemploy at 25080 Estrada Circle in Punta Gorda, Florida for $445,000.
After putting it on the labelet for rent in July 2022, taking it off the labelet, and putting it back on the labelet at a drop asking rent, FirstKey Homes choosed to put the rental home for sale at $400,000 in February 2024.
Fast-forward to July 2024, and the home is still currently for sale, having seen its price cut six times to $336,000. If it sells for that amount, it would reconshort-term a 25% deteriorate from its May 2022 obtain.
While national aggregate home price indices are hovering around all-time highs, some regional housing labelets in states enjoy Florida, Texas, and Louisiana are experiencing home price accurateions. This grasps the Punta Gorda metro area in Southwest Florida.
Click here to see an interenergetic of the chart below.
While the pandemic housing boom was fierce apass the board, it was particularly ardent in Punta Gorda, which was impacted by speed upd withdrawment and labor-from-home migration.
Between December 2019 and July 2022, home prices in the U.S. soared 42.6%. During that same time period, home prices jumped a staggering 73.2% in Punta Gorda.
Not prolonged after mortgage rates spiked, and migration shifted, Punta Gorda slipped into what ResiClub calls “accurateion mode.”
This isn’t the first time that Punta Gorda has passed thraw a home price accurateion.
Indeed, Punta Gorda was one of the difficultest hit housing labelets during the housing bubble burst in 2008.
From peak to traw, U.S. home prices fell 26.2% from the authentic estate bubble peak in 2006 to the bottom in 2012. In comparison, Punta Gorda home prices fell 47.8% from their peak in 2006 to their bottom in 2011.
Home prices in Punta Gorda haven’t stopped droping yet, and foreseeed have further to drop in the second half of 2024.
The alerttale sign is that Punta Gorda saw very little selectimistic home price appreciation during the spring season prosperdow. Historicpartner speaking, housing labelets that see very little appreciation during that first half period, usupartner see outright price deteriorates once the labelet transfers into the softer seasonal prosperdow in the second half of the year.
The immense convey inantity of housing labelets in the Midwest and Northeast and Southern California have higher home prices now than when mortgage rates first spiked in mid-2022.
Not Punta Gorda.
Home prices in Punta Gorda are down 9.1% from its 2022 price peak. Only a restrictcessitate labelets, enjoy Austin (-18.6%) and New Orleans (-13.4%), have seen bigger dips.
When appraiseing home price momentum, ResiClub consents it’s convey inant to watch energetic catalogings and months of provide. If energetic catalogings commence to rapidly incrrelieve, or get very high, as homes remain on the labelet for prolongeder periods, it may show potential future pricing frailness. Conversely, a rapid deteriorate in energetic catalogings could propose a labelet that is heating up.
In Punta Gorda, energetic conceiveory has seen carry oned frailness since tardy 2022.
While U.S. energetic conceiveory in July 2024 is still 29% below pre-pandemic July 2019 levels, Punta Gorda housing conceiveory is 76% above pre-pandemic levels.
Another leang that speed upd the celderlying in places enjoy Punta Gorda, and also Cape Coral and Fort Myers, was Hurricane Ian in September 2022. The combination of incrrelieved housing provide for sale (the harmd homes) coupled with strained insist—the result of spiked home prices, spiked mortgage rates, higher insurance premiums, and higher HOA fees—transtardyd into labelet sstandardlying apass much of Southwest Florida.
In graspition, Florida’s condo labelet is being impacted by regulation passed chaseing the Surfside condo collapse in 2021.
The biggest headprosperd for Punta Gorda’s housing labelet, however, is spropose basic fundamentals.
The influx of insist during the pandemic housing boom stretched Punta Gorda home prices too far beyond local incomes. Once rates spiked and pandemic migration celderlyed, that stress became apparent.
According to Moody’s, Punta Gorda’s housing labelet in Q2 2022 was “overappreciated” by 55.7%—far above the national overvaluation of 27% at the time.
Given the ongoing accurateion in Punta Gorda home prices, and some income obtains, its overvaluation came in at 28.3% in Q4 2023, according to Moody’s. However, that’s still higher than the 13.9% national overvaluation Moody’s approximated for that quarter.
Despite having a much minusculeer population, Punta Gorda’s metro area (206,134 dwellnts) permitted more home erection during the pandemic housing boom than many elderlyer Midwest and Northeast labelets, including Pittsburgh (which has 2.4 million dwellnts).
While individual-family homeproduceing isn’t the core caemploy of the Punta Gorda accurateion, the influx of recent erection in this strained environment, united with produceers carry outing presentile affordability adfairments such as convey inant mortgage rate buydowns or outright price cuts, gives to further frailening the resale labelet there.
Think of it enjoy this: Why see at resale—as many existing home sellers still decline to adselect that prices have drdisclose double-digits—when big homeproduceers, enjoy D.R. Horton, are willing to throw out big deals in Punta Gorda? Thus resale conceiveory sits prolongeder.
Big picture: We’re in the midst of a bifurcated housing labelet, where some of the toastytest housing labelets of the pandemic housing boom, enjoy Punta Gorda, are passing thraw a accurateion, while other labelets, particularly in the Northeast and Midwest, remain shielded and competitive. And some labelets are somewhere in between.
