There is a real concern that the extremely hot housing market has started to collapse, especially in markets where prices have surged at record paces. One of the threats is due to mortgage rates that have risen from 3% a year ago to 7% recently. Home affordability has been compromised. Several markets have home prices that rose at a hotter pace than most of the market, which is extraordinary. According to new research, the one with the largest run-up since the start of the COVID-19 pandemic is Cape Coral, FL.
Data collected by a home remodeling company showed the top increases, on a percentage basis, across 50 cities. Most of the data came from the home sales company Zillow. The cities with the highest increases were heavily concentrated in one state. The researchers said: “Florida cities dominated the list of 50 cities, with five in the top ten alone.” The measurement began at the start of 2020 and ran through this July.
Home prices in Cape Carol rose 86% to $437,000. That is about the median value of a home nationwide. Several other cities were clustered in the same part of Florida. St. Petersburg ranked third with a price jump of 77% to $368,000. Clearwater ranked 5th with a surge of 71% to $361,000. Tampa ranked 8th with an increase of 69% to $420,000.
Home price increases in these cities may have collapsed. Hurricane Ian tore apart many of the towns on Florida’s West Coast. The devastation in Cape Carol was as bad as in any other city in the region.
Even without the storm, Cape Coral’s prices have been at risk. Cities with double-digit price jumps may fall the most as the housing market begins to have prices that reset lower. One of the reasons is affordability. More and more residents in cities where home prices moved sharply found it impossible to stay. Marry this with mortgage rates and the effects on home prices will be terrible.
The new data only measures home prices through July. If they showed the numbers through September, the conclusions would become exaggerated.
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