The Pandemic Housing Boom has officially gone cold with a housing recession already here in many areas across the United States. The current decline in housing prices already marks the fastest housing market contraction since 2006. The current consensus seems to be that this housing recession won't be as bad as the Great Recession of 2008, but new reports show that drastic price corrections will be hitting regional markets in 2023 and 2024.
This is important because when consumer have equity in their homes mortgage lenders do not pursue foreclosure as often. This happens because consumers can sell their home and payoff the loan, refinance, or maybe get a loan modification. Most mortgage lenders will go for this because their position is secured due to the equity in the home. However, once prices start dropping, people tend to lose their equity quickly. The current housing market is saturated with mortgage lenders looking to lock consumers in to cash out refinances. This means that they are selling home equity lines to consumers to payoff credit cards and other debts. The problem is that once housing prices drop, equity will disappear. Once equity disappears any drop in home prices will have a major negative impact on consumers. In many situations, consumers will not be able to continue to afford mortgage payments. Once payments stop and equity is non-existent, mortgage lenders will jump into the market and pursue foreclosures aggressively. If consumers can't sell their homes due to lack of equity and cannot pay the mortgage due to lack of equity and income then the foreclosures will grow quickly and housing will continue to suffer. The number of corporate buyers in the market now will only multiply the problems ahead for consumers as these corporate buyers will look to take properties at bargain basement prices before re0inflating the market.
A recent survey by Moody's suggests that in 2023, Florida cities will start to see significant price drops in homes. The cities cited by Moody's to lead the way include The Villages, Florida. With a -7% price drop and Punta Gorda, Florida. Lakeland, Tampa, and South Florida are not far behind. 2024 doesn't look much better with the same regions looking at another price drop in the 5-7% range. When the dust settles we expect home prices to drop anywhere from 10-20% in many regions across Florida to make up for the Pandemic Housing Boom which has left most homes in Florida at a 15-30% overvaluation.