Santiago de Chile, A Pandemic Boomtown
Changing Real Estate Dynamics
The surge in real estate prices across the nation during the pandemic led to bidding wars, all-cash offers, and contingency removals becoming the norm. However, the tide has turned in some markets. According to global mortgage data and technology provider Intercontinental Exchange (ICE), home prices in several large US cities declined in April. Notably, San Antonio and Austin in Texas, and Tampa, Florida — once among the most popular cities during the pandemic — experienced the most significant monthly price declines.
This shift comes as these markets recalibrate, with more listings being added by homesellers and house builders, even as fewer Americans relocate to these areas. "The key differentiator we're seeing in terms of growing inventory levels in Florida and Texas is a rise in sellers' willingness to list their homes for sale," said Andy Walden, vice president of enterprise research strategy at ICE Mortgage. Nine major US markets have seen new listings exceed pre-pandemic averages, with eight of those in Texas or Florida.
Supply and Demand Realignment
In April, monthly home prices declined the most in San Antonio at 0.3%, followed by 0.25% in Austin, and 0.16% in Tampa, according to ICE Mortgage. This cool-down marks a sharp turnaround from the rapid price increases seen during the pandemic. Austin home prices soared almost 70% between 2020 and 2022, while San Antonio rose 40% and Tampa rose 60%, based on ICE Mortgage data.
Allan Griego, owner of Austin Market Realty, told Yahoo Finance that during COVID, homebuyers were making offers 5% to 20% over asking prices, inflating the market with "hyper-accelerated value that was not sustainable." The combination of people moving to these markets for more space and local homeowners halting sales led to a significant supply and demand imbalance.
From 2020 to 2022, the number of available homes-for-sale dropped drastically, with the lowest monthly active listing counts at 1,400 in Austin, 2,600 in San Antonio, and 3,000 in Tampa — representing a 67% to 80% inventory deficit compared to 2017-2019 averages. Concurrently, inbound migration surged, significantly increasing the population in these cities.
Current Market Conditions
As of May, active listings had increased to 10,000 in Austin, 11,000 in San Antonio, and 15,000 in Tampa. Homes are now staying on the market longer than the national average, indicating a shift towards a buyer's market. One factor contributing to this is the lack of affordable property insurance, pressuring more homeowners to sell. The average property insurance premium in Florida and Texas in 2023 was $11,000 and $4,500 respectively, far above the national average of $2,400. Severe weather events, including hurricanes, tornadoes, and floods, have driven up insurance premiums in these areas.
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