Florida Housing Market Warning Issued by Man Who Predicted 2008 Crash – Newsweek

The U.S. housing market will remain widely unaffordable, despite growing inventory and dwindling home sales, according to housing analyst Bill McBride, as mortgage rates remain high and insurance premiums skyrocket across the country.

In one state in particular, Florida, this has been painfully clear, as a recent surge in inventory has not stopped the rise in home prices in the state.

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McBride, who accurately predicted the 2008 housing crash on his Calculated Risk blog around two years before it happened, told Lance Lamberts, the editor of media and research outlet ResiClub, that the housing market will avoid a crash like the one experienced 16 years ago, while remaining a tough environment for homebuyers.

As of May, according to the latest data available on Redfin, the median sale price of a home in the U.S. was $438,483, up 4.8 percent from a year earlier and higher still than the peak of over $432,000 reached in May 2022.

That was despite the fact that home sales plunged by 11.3 percent in the same month compared to their April level, according to Census Bureau data—the lowest level since November 2023—and inventory was up by 15.3 percent year-on-year, according to Redfin. In May, there were 1,757,727 homes for sale in the country, including 659,510 newly listed homes, up 9.7 percent year-on-year.

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In Florida, the number of homes for sale was up 40.1 percent year-on-year in May, while newly listed homes were up 12.5 percent. The median sale price of a home in the state was $420,100, up 3.1 percent compared to a year earlier.

This recent rise in active inventory for sale—especially in states like Florida and Texas, which have been building a lot of new homes—has not translated into a significant drop in prices. For McBride, growing supply will lead to a significant slowdown in price growth later this year, but not necessarily to national price declines.

And certainly not yet. At the moment, according to Redfin, the average months of supply in the U.S. stands at two. That means that if there was no new listing starting from now, it would take two months to sell every property on the market at the current sales rate.

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While more than six months of inventory is generally expected to bring about price drops, McBride said that “we might see national price decline with months-of-supply above five[…]since most potential sellers have substantial equity and might be willing to sell for a little less.”

The average months of supply is higher in Florida than at the national level, with about four months of inventory in the Sunshine State. But the reason why a growth in inventory isn’t immediately translating into lower prices has to do with other growing costs there, McBride said, such as insurance.

“Inventory is up sharply, and already above 2019 levels in many parts of Florida,” the analyst told ResiClub. “I think the primary reason [for a growth in inventory] is the lack of affordable homeowners’ insurance because of destructive storms and rising sea levels due to climate change,” he added.

The heightened risk posed by climate change, especially to Florida’s coastal towns, is likely to make “some areas further north more desirable” places to live, McBride said.

In other parts of the country McBride said, “Probably the biggest headwind is restrictive policies that limit construction in many desirable areas. For California, this is a severe problem,” he told Lamberts.

The analyst again identified climate change among the biggest problems facing the U.S. housing market.

“Other headwinds include the lack of water in the Southwest, and the impact of climate change, especially in some of the southern states.”

Benjamin Collier, a risk management and insurance professor at the Fox School of Business at Temple University in Philadelphia, previously told Newsweek that this year’s hurricane season “is shaping up to be a concerning one for Florida.”

Last month, the National Oceanic and Atmospheric Administration published its outlook for the 2024 season, predicting an 85 percent chance of an above-normal season and forecasting a range of 17 to 25 total named storms, of which eight to 13 are expected to become hurricanes.