Updated observations on single family home market in South and Southwest USA

[GON]

For over five years I occasionally posted about single family home market trends on BITOG.

I have tracked single family market home trends in the US like a hawk for over 15 years. The reason I tracked single family home price trends so keenly was we typically move +/- every 24 months, to a location we didn't get a vote, and most importantly, we took two significant losses on real estate purchase in 2004 and 2006. We purchased our 2006 home before selling our 2004 home, and ended up with two unsellable homes in 2008. So we went "gun shy" when it came to single family home prices. Being gun shy meant we declined to buy a home in Midway, UT that the seller could not sell in 2018 for $750k, this home sold in 2021 for over $1.5 million. And we loved the home.

Back to the focus of this thread. After watching home prices, time on market, quality of home, etc--- for the first time this decade, observations strongly suggest home prices, and strength of market in the South and SouthWest are no longer "hot". Homes that we looked at in markets like far south Texas, and far south Arizona that were going under contract 24 hours after being listed, are no longer going under contract so quickly. A home we loved that went on the market JUN 2024 in Rio Rico, AZ that three years ago would have sold without a buyer from the north even touring the property, remains on the market today. We would have purchased the home in Rio Rico, but the Seller wouldn't negotiate one inch on anything. I am seeing the same in South Texas, and much of Texas for that matter.

My observations sugges the migration from the Northeast, Upper Midwest, California/ Washington/ Oregon to the South and Southwest has slowed. Not sure if the migration will return anytime soon-- but history has always been "move west young man", and I suspect west equating to the south and southwest will return again, and likely sooner than later.

Might be a good time to consider buying in the south and southwest.

On a MICRO note, in my often reported as undesirable state of New Mexico, my neighboorhood has a large roation of residents every year at this time. On our block, four homes recently listed for sale at the highest price per square foot in the history of the subdivision, three of the four homes listed went under contract in less than five business days. So undesireable southern New Mexico has a strong market at this moment (MICRO observation).

 

[rstcso]

Thank you for sharing your observations. My wife and I live just north of Austin and the market has slowed/reversed considerably. Unfortunately, our appraisal district doesn't think so, so we're in the process of protesting our current appraisal.

At the beginning of Covid, one of our neighbors listed his house of a Thursday at $460k and closed bidding two days later, accepting a $590k cash offer from a couple moving from California, sight unseen. Thinking that was crazy, the next couple of years we saw a couple more neighbors sell for $750k and $800k.

Since, the market has cooled significantly with prices dropping to the $500k range for comparable homes. The county appraisal district has been raising home valuations by 10% each year, the maximum allowed by state law. This year's appraisal crossed the threshold of the illusion of reasonable, so we've filed a protest. There have been enough comparable homes sold in our area within this past year for less than their current appraisal of our home, so we're hoping to get the valuation lowered. Putting together data. Lots of data.

When the kids were younger, I took them to the Trinity site the first Saturday of October. Afterwards, we went to Three Rivers Petroglyphs, then the dunes at White Sands, where they spent a couple of hours just climbing to the top and rolling down to the bottom. The next day we went to the science museum in Alamogordo, both observatories in Sunspot, then Carlsbad Caverns. It was a whirlwind of a trip. That winter I took them back to Cloudcroft just to go tubing. We rarely saw a light dusting of snow around here, although the history book were rewritten a few years ago.

 

[GON]

Thank you for sharing your observations. My wife and I live just north of Austin and the market has slowed/reversed considerably. Unfortunately, our appraisal district doesn't think so, so we're in the process of protesting our current appraisal.

At the beginning of Covid, one of our neighbors listed his house of a Thursday at $460k and closed bidding two days later, accepting a $590k cash offer from a couple moving from California, sight unseen. Thinking that was crazy, the next couple of years we saw a couple more neighbors sell for $750k and $800k.

Since, the market has cooled significantly with prices dropping to the $500k range for comparable homes. The county appraisal district has been raising home valuations by 10% each year, the maximum allowed by state law. This year's appraisal crossed the threshold of the illusion of reasonable, so we've filed a protest. There have been enough comparable homes sold in our area within this past year for less than their current appraisal of our home, so we're hoping to get the valuation lowered. Putting together data. Lots of data.

When the kids were younger, I took them to the Trinity site the first Saturday of October. Afterwards, we went to Three Rivers Petroglyphs, then the dunes at White Sands, where they spent a couple of hours just climbing to the top and rolling down to the bottom. The next day we went to the science museum in Alamogordo, both observatories in Sunspot, then Carlsbad Caverns. It was a whirlwind of a trip. That winter I took them back to Cloudcroft just to go tubing. We rarely saw a light dusting of snow around here, although the history book were rewritten a few years ago.

Thanks for the reply.

You are only the second person I know who has visited the Trinity site. With the Trinity site only open one or two days annually, and a remote location--visiting the Trinity site is an extremely rare occasion only experienced by a very few.

Sounds like you enjoyed the greater White Sands area.... great to hear. As a state New Mexico is having some challenges, primarily with substance abuse, and the crime that follows substance addictions. We pray that the importation/ production of substances that negatively impacts so many lives will become a thing of the past.

I pondered what if the new chip plant being built outside of Anthem, AZ would have been built instead in the tribal areas of Northern New Mexico. The greater Phoenix area didn't need any economic stimulation. Northern New Mexico had plenty of affordable land, and a workforce with the potential to be masters of the chip building industry. Could have changed the outlook for a significant amount of people.

 

[rstcso]

Many years ago, my wife and I spent a week in Ruidoso. Each day we'd drive outward a different direction with only one plan... stop at every historical marker we saw. That's what led me to going back with the kids later that year to the Trinity site.

It's a shame what's happening in many parts of our country, with NM being especially hard-hit.

 

[SC Maintenance]

Good post - thank you.

A series of questions - if you happen to know:

1) Are the areas your tracking mostly Retiree?
2) You mentioned one home the seller would not negotiate. For the ones your seeing not moving, are they getting price reductions in general?
3) What makes you think the influx of migration from other areas will start again soon?

Thank you for your observations. I always prefer on the ground finance reports to the narratives we get in the mainstream.

 

[walterjay]

Interesting observation.

In my area of northern Maryland the time that a house is on the marked seems to have increased. Prices remain high.

 

[Cujet]

Interesting. I'm in Jupiter Farms, FL. It's the semi-rural NW area of the 114 mile long West Palm, FT. Laud, Miami metro area (now one big city). As such, it is a wonderful escape from city life. The market seems pretty strong here in my 'hood.

There is a nice natural area (Northeast Everglades Natural Area, NENA) behind my home. So no neighbors behind and some addl land I do not own, yet is on my side of the canal and makes my oversized lot even bigger.

However, I've had a bit of a time determining a price for my home. I get a lot of pressure to price it at a point where I could never purchase a similar home in my area. Maybe it's just realtors and potential buyers looking to optimize their side of the equation. Neighbor verbally offered me $770k. Zillow says $854K, Zillow also says our sister home (identical and on my street 10 homes down, same side) is $999K. But we have a larger lot, a 3 car garage, gas appliances and so on.

My home needs a new roof, or adequate repairs, and could use new French doors as some are rusting and some are foggy. So discount fully for that.

 

[Capt W]

After watching home prices, time on market, quality of home, etc--- for the first time this decade, observations strongly suggest home prices, and strength of market in the South and SouthWest are no longer "hot". Homes that we looked at in markets like far south Texas, and far south Arizona that were going under contract 24 hours after being listed, are no longer going under contract so quickly.

You make very interesting observations. How much of the slowdown can be attributed to markets seeking equilibrium...especially in comparison to the asinine pricing that was omnipresent a few years ago? Add to that a definite slowdown in writing mortgages for high-risk roaches...

We bought our 1400 sq-ft 4BR home about 2.5 years ago on the south side of Corpus, about six blocks from Oso Bay and about two miles from the Gulf (of America). Prices in my subdivision have remained very steady (mid-to-high $200s), but homes are remaining on the market for months in lieu of days or weeks as they had before. Our neighborhood is one of very few that's HOA-free, so it remains popular. However, being a normal working-class area, I think the mortgage money is just a bit harder to come by these days. And that probably isn't a bad thing.

My observations suggest the migration from the Northeast, Upper Midwest, California/ Washington/ Oregon to the South and Southwest has slowed.

Best news I've read today. Let's hope it's true.

 

[Capt W]

That winter I took them back to Cloudcroft

What a gem that place is! Took the family up there several times while at Holloman AFB.

 

[JeffKeryk]

Silicon Valley home price growth has slowed, from what I can see. The economy appears to be shrinking.

 

[GON]

1) Are the areas your tracking mostly Retiree?

No, with the exclusion of Rio Rico, which does attract a lot of Retiree monies for higher priced homes

2) You mentioned one home the seller would not negotiate. For the ones your seeing not moving, are they getting price reductions in general?

No, not seeing price reductions. People appear to being willing to sit on a home than reduce its price. If they own the home with a mortgage at let's say three percent, hard to be motivated to take a price cut, and then go purchase another home and finance at upwards of seven percent

3) What makes you think the influx of migration from other areas will start again soon?

"Go west young man" has always been the American way. That trend will continue. Current market and other conditions have seen a slowdown in that trend, but it will return. Hard to relocate today from upstate NY or Minneapolis MN to Naples FL, as Naples FL even with significant growth of homes for sale, is considerably more expensive than upstate NY or Minneapolis MN. People in those and other like areas are chomping at the bit to move to FL, TX, AZ, NC, SC, TN etc--- but the prices in FL, TX, AZ, NC, SC, TN, along with plus six percent mortgage rates, and jobs that won't qualify for a mortgage in FL, TX, AZ, NC, SC, TN at six percent, have slowed down the migration.

 

[GON]

Interesting observation.

In my area of northern Maryland the time that a house is on the marked seems to have increased. Prices remain high.

Yes, the homes that were hitting the market over the past decade in MD, IL, NY, PA, etc--- from people migrating south and west are no longer hitting the market at the level they were. So, homes in MD, IL, NY, PA, etc are temporarily rising in value at a higher percentage than homes in the south or southwest, but only temporarily. If you live in a place like IL, there might never be a better time to "get out while the getting's good".

 

[GON]

How much of the slowdown can be attributed to markets seeking equilibrium...especially in comparison to the asinine pricing that was omnipresent a few years ago?

If interest rates fall again to sub three percent levels, places like Corpus Christi, TX likely will see a higher growth in price that places like MD, IL, NY, PA, etc.

TX and FL used to offer a significant single family home price advantage to place like MD, IL, NY, PA, etc. That is no longer the case.

Best news I've read today. Let's hope it's true.

It's just off season, they will be returning......

 

[GON]

Silicon Valley home price growth has slowed, from what I can see. The economy appears to be shrinking.

The economy hasn't holistically grown in many years. Borrowing from Chinese peasants and the like to pay for very inefficient government programs and giveaways is a fake economy. The bond market has unquestionably told us that for over two years and telling us today now more than ever.

Maybe the Chinese have stolen enough of the intellectual property from Silicon Valley, and benefiting from their thefts, that Silicon Valley is no longer what it used to be.

Other than public enemy number two (Musk) organization's TSLA, Starlink, and Space X, I can't think of many private economic growth areas in the US for the past decade.

 

[CKN]

The house I sold in Southern California 13 years ago is now worth 1.1 million. I did not sell any where near that. And who wants to live in Rio Rico- aginst the border? By choice- that's a place you live when you didn't save enough for retirement.

 

[GON]

1) Are the areas your tracking mostly Retiree?
2) You mentioned one home the seller would not negotiate. For the ones your seeing not moving, are they getting price reductions in general?

This is the home in Rio Rico we made an offer on. We had awareness of the home going for sale before it was listed. Our offer avoided the seller paying any real estate commissions, no inspection no appraisal, cash offer of over $800k.

Home is very nice, but needs a lot of updates and work. Seller was a widow moving to her Daughters in South Carolina.

Seller laughed at our offer. Home is now on the market about one year. I wonder if the seller a year later regrets not negotiating with our offer

https://www.zillow.com/homedetails/38-Avenida-De-Las-Naciones-Rio-Rico-AZ-85648/67444832_zpid/?

 

[JHZR2]

My observations sugges the migration from the Northeast, Upper Midwest, California/ Washington/ Oregon to the South and Southwest has slowed. Not sure if the migration will return anytime soon-- but history has always been "move west young man", and I suspect west equating to the south and southwest will return again, and likely sooner than later.

Of course it would. It’s folly IMO.

Functional areas of the NE, CA, etc… areas where jobs and money actually existed, were so for a reason.

Lots of folks, sure. And that brings problems. Sure. And taxes, and costs for infrastructure and upkeep.

But sleepy areas without infrastructure were cheap for a reason. Places that the industrial era forgot, or even post civil-war reconstruction forgot… or were never even developed..beautiful spots in some conditions… but many that are oppressively hot, excessively humid, hurricane prone, lack of fresh water, lack of infrastructure, lack of power.

Sure, it’s cheap (at least it used to be, not any more in many places). Sure some places have tax advantages so companies moved in (after manufacturing was decimated to China over the last 50 years). But those issues still exist.

And then, compound it. Poor schools, everything far apart, reliance on bussing and driving, and people moving in, requiring infrastructure, congesting roads, etc. How exactly is Atlanta, Charlotte, DFW, Houston, Austin, Phoenix, etc. better than the “legacy” cities?!?

The folks that moved there brought their failed policies. The crime, congestion, etc. all existed. Trash people are everywhere.

Only it’s hotter, no season, bad conditions when it storms, increasing prices, increasing taxes, increasing costs. For what redeeming quality exactly?

I’m sure folks will have dissenting opinions to mine, as a lifelong mid-Atlantic living person. And that’s fine. Folks can do their own thing as they see fit. But I never saw the redeeming quality of uprooting to any of these boom places. Beautiful places, many of them. But a place to move? Meh.

 

[GON]

Interesting. I'm in Jupiter Farms, FL. It's the semi-rural NW area of the 114 mile long West Palm, FT. Laud, Miami metro area (now one big city). As such, it is a wonderful escape from city life. The market seems pretty strong here in my 'hood.

There is a nice natural area (Northeast Everglades Natural Area, NENA) behind my home. So no neighbors behind and some addl land I do not own, yet is on my side of the canal and makes my oversized lot even bigger.

However, I've had a bit of a time determining a price for my home. I get a lot of pressure to price it at a point where I could never purchase a similar home in my area. Maybe it's just realtors and potential buyers looking to optimize their side of the equation. Neighbor verbally offered me $770k. Zillow says $854K, Zillow also says our sister home (identical and on my street 10 homes down, same side) is $999K. But we have a larger lot, a 3 car garage, gas appliances and so on.

My home needs a new roof, or adequate repairs, and could use new French doors as some are rusting and some are foggy. So discount fully for that.

I had known your area very well in the early 1980s. I had built a 3 bedroom, 2 bath home on 1 1/4 acres in Royal Palm Beach for a whopping $54k USD (1984). All the well-off folks bypassed Royal Palm Beach for Jupiter Farms-- it is a beautiful area. IIRC Burt Reynolds had a ranch in Jupiter Farms.

On your home, here is my two cents. Three years ago you needed to do zero repairs, updates, or maintenance to get full listing price, maybe more than full listing price. Unless your lot has something so unique that other homes can't compete with, you have to get your home properly updated and repaired to sell at full price. A unique lot might be something like waterfront, borders a conservation area, etc. Your post implies you have a special lot.

The market in Palm Beach county three years ago you didn't need to address "new roof, or adequate repairs, and could use new French doors as some are rusting and some are foggy". In today's market, I think you have to fix those, and have the home "dress right dress", to expect to get a buyer paying full price. On behalf of my wife, I am currently looking at a second home, waterfront homes in Texas. Most of the waterfront homes, even at eight figures (not a typo), need updating. Not too many motivated buyers wanting to pay full price for a home that needs updating.

A COA that might be worth considering. Replace all the doors, replace all the flooring, replace (or renew) the roof, maybe replace all the windows, update all the fixtures, paint the entire home a neutral color, maybe new vanities, maybe new countertops. Rent/ buy some shipping containers put in a not easy to view area of your lot to store your stuff/ declutter. Then put the home on the market.

If the home sells, you did well. If the home doesn't sell- you have an updated, refreshed home in a great area for a recently retired guy. It might be a win-win for your wife and you.

 

[GON]

Of course it would. It’s folly IMO.

Functional areas of the NE, CA, etc… areas where jobs and money actually existed, were so for a reason.

Lots of folks, sure. And that brings problems. Sure. And taxes, and costs for infrastructure and upkeep.

But sleepy areas without infrastructure were cheap for a reason. Places that the industrial era forgot, or even post civil-war reconstruction forgot… or were never even developed..beautiful spots in some conditions… but many that are oppressively hot, excessively humid, hurricane prone, lack of fresh water, lack of infrastructure, lack of power.

Sure, it’s cheap (at least it used to be, not any more in many places). Sure some places have tax advantages so companies moved in (after manufacturing was decimated to China over the last 50 years). But those issues still exist.

And then, compound it. Poor schools, everything far apart, reliance on bussing and driving, and people moving in, requiring infrastructure, congesting roads, etc. How exactly is Atlanta, Charlotte, DFW, Houston, Austin, Phoenix, etc. better than the “legacy” cities?!?

The folks that moved there brought their failed policies. The crime, congestion, etc. all existed. Trash people are everywhere.

Only it’s hotter, no season, bad conditions when it storms, increasing prices, increasing taxes, increasing costs. For what redeeming quality exactly?

I’m sure folks will have dissenting opinions to mine, as a lifelong mid-Atlantic living person. And that’s fine. Folks can do their own thing as they see fit. But I never saw the redeeming quality of uprooting to any of these boom places. Beautiful places, many of them. But a place to move? Meh.

The only two comments I have on your post are:

(1) most every new significant plant being built in the U.S. is in the south. A new massive steel plant is being built in Louisiana or Mississippi (I don't recall for sure). Other than Ohio, almost no organization is opening massive new plants/ facilities in the Upper Midwest or Northeast. This means young adults will flee the Upper Midwest or Northeast on a MACRO basis. Essentially brain drain.

(2) Federal government is building almost all of its new facilities in the South/ South West (exception being greater WDC area). Federal government claims the reason for this is to attract young talent. Army Futures Command, new HQ built in Austin, TX. Why not Milwaukee, why not Cleveland, why not Buffalo? New FBI HQ being built/ moved to Huntsville, AL. Why not Detroit? Why not the south side of Chicago?

Particularly the southern states have made a business-friendly environment. Makes it really challenging for an Upper Midwest or Northeast state to attract new plants, talent, etc. It is reality. Heck, even look at California. The TSLA plant might be the only significant investment in manufacturing in California this century. Yet the state has the largest population in the nation. Might an unfriendly regulatory and tax climate towards business and industry be a reason organization are no longer building plants in California on a MACRO basis?

 

[SC Maintenance]

This is the home in Rio Rico we made an offer on. We had awareness of the home going for sale before it was listed. Our offer avoided the seller paying any real estate commissions, no inspection no appraisal, cash offer of over $800k.

Home is very nice, but needs a lot of updates and work. Seller was a widow moving to her Daughters in South Carolina.

Seller laughed at our offer. Home is now on the market about one year. I wonder if the seller a year later regrets not negotiating with our offer

https://www.zillow.com/homedetails/38-Avenida-De-Las-Naciones-Rio-Rico-AZ-85648/67444832_zpid/?

It looks like a nice place. Still - $800K for a house in what appears to be the middle of nowhere. Am I missing something? Is there major industry / job opportunities nearby?

As for the seller - people that have never worked in any kind of B2B environment see every transaction as a used car sale, and if someone makes an offer they don't like they perceive that as trying to take advantage of them. So I doubt they regret it. They should have countered with 850K and moved on, but again - those who have never put together a B2B deal don't realize it has to be a win - win deal for everyone involved or it doesn't get done.