Housing is piling up in four U.S. metropolitan areas, giving buyers the upper hand, a report released Tuesday suggests.
In four metropolitan areas that were hot during the pandemic — Austin, Texas, and Cape Coral, Miami and North Port in Florida — inventory continues to grow, swinging housing market conditions from favoring sellers to buyers, according to the November Housing Market Indicators report by the American Enterprise Institute.
All areas have a supply of at least seven months. A "balanced market" constitutes four to five months of inventory, according to Brad Case, chief residential economist at Homes.com. Anything below that threshold tends to favor sellers, while anything above it helps buyers.
The AEI report compared changes in the months of supply and average sales prices in 60 of the nation's densest metropolitan areas for the month of October based on a mix of data sources. The Washington, D.C.-based nonpartisan nonprofit researches a broad number of industries. It identified these four metropolitan areas as outliers; the rest of the country exhibited balanced conditions or a tight supply that favored sellers.
"Demand was goosed up [during the pandemic], and Economics 101 says 'when you have restricted supply and high demand, prices are going to increase', said Ed Pinto, director of the AEI Housing Center." "Now, incomes have to catch up. It takes time. In the meantime, demand goes down."
In the report, Austin had a 7.1 months' supply, Cape Coral and Miami came in at 9.6, and North Port registered 8.4. Pinto said he expects the trend to continue upward because the housing options in these metropolitan areas tend to be too pricey for the average buyer.
In Miami, for example, he said, only 2.9 months of supply is around the $285,000 list price.