Fewer Americans are moving to Southern states.

With domestic migration plunging 50% from the pandemic peak.

In 2022, 849,000 net people moved in.
In 2024, 411,000 net people moved in.

Basically back to pre-pandemic levels. If these trends hold, there will likely be continued issues in Sun Belt housing markets that relied on the big pandemic influx to fuel price growth. 1) Things look even worse when you consider the domestic migration levels relative to population size.

The 411,000 net people who moved South in 2024 were a mere 0.32% of the region's 132 million people.

Accounting for one of the lowest domestic migration growth rate in the last decade.

Home builders in America's south have a big problem.

They currently have a record number of homes for sale.

Yet domestic migration into the South has plummeted the last two years.

The result being: a huge overhang of builder inventory that is now pushing down home prices in several southern states.

Watch this story in 2025. It will likely worsen. 1) This is problematic for builders, and Southern housing markets, in general.

Because local homebuyers in states like Tennesse, Florida, and Texas were priced out of the market during the pandemic boom.

So the continued appreciation in these states is reliant on a continual influx of new homebuyers, plus the supposed "shortage" of housing.

Rising long-term bond yields are creating big issues for real estate investors.

With the 10-year US treasury now rising past the Cap Rate, or net profit %, from a rental property.

This means US government bonds now have the same return as buying a house and renting it out.

As a result - investor purchases have plummeted. And more investors are selling—especially the institutional ones. 1) To fully understand just how problematic this situation is for aspiring investors, let's do some simple math:

$2,174 is the monthly rent for a single-family home in US.

$26,088 year in gross rent.

$16,957 in net income after expenses (65% margin).

Divide that by the typical price of a single-family home - $357,000 - and you get a minuscule 4.76% cap rate or annual investor return.

That's simply not high enough to make cash-flow based real estate investment worthwhile in this interest rate environment.

Homebuyer demand has plummeted to the lowest level in 30 years.

With mortgage applications to purchase down 63% from the pandemic peak.

The last time we saw demand this low, it was 1995. 1) It's truly shocking just how much demand has dropped.

Through the first week of January 2025, mortgage apps were down:

-14% from same week last year
-19% from 2023
-54% from 2022
-59% from 2021
-52% from 2020

50 years of Home Price Growth in Florida.

Note how from 1975 to 2000, Florida home prices matched the inflation rate. Almost identically.

Then starting in 2000 something changed. Florida home prices became increasingly volatile. And haven't tracked inflation at all.

Curious why you all think this happened. I have my own thoughts shared in the comment section below. 1) My underlying theory is related to interest rates.

When interest rates were higher, in the 1970s-90s, Florida didn't receive much speculative real estate attention. And thus its home prices remained more stable.

But once interest rate suppression started in the early 2000s, Florida became the epicenter of real estate speculation.

Investors, 2nd homebuyers, 3rd homebuyers, and builders were all looking for an area to put capital. And Florida became it.

Florida has become very expensive.

With housing costs up 140% from their pre-pandemic levels.

In 2019 you could buy a house in Florida with a mortgage and only spend $1,060/month.

Fast forward to today and the monthly payment is $2,540/month. 1) Home prices in Florida are up 60% over the last five years, which is the main reason for this increase in housing costs.

The typical value of a house in Florida was $243k in Nov 2019.

By Nov 2024 it was $389k.

Rarely has buying a home been this expensive in America.

The only other two times with historical precedence are 1981 and 2006.

In 1981 mortgage rates were 18%.

In 2006 we were about to experience the biggest housing crash ever.

What will happen in 2025 and beyond? 1) I feel confident in predicting that housing will get more affordable for Americans over the next several years.

The question is: how?

Home builder spec homes for sale just hit 2nd highest level ever.

Quite the rebound from the shortage experienced from 2012-22.

Builders are doing their part to inundate the housing market with supply.

Only other time there has been more builder spec inventory was 2008 bubble. 1) A "spec" home is completed and sitting vacant for sale.

The builder built it intentionally without a buyer or wasn't able to find a buyer during construction.

So the home is just sitting vacant on the lot.

Housing inventory in Palm Beach, FL is skyrocketing. 1) Housing supply in Palm Beach County is up to 12,722 active listings in November 2024.

That's up 47% YoY. And is now near the highest level going back 7 years.

Suggesting a slowdown in the market is occurring. There's been a big drop in buyer demand, which is causing more listings to linger on the market.

Access the data here: map.reventure.app/dashboard?geo=…

Days on Market in Florida.

Nov 2023: 56 days
Nov 2024: 78 days

+39% increase YoY. Highest level since 2017. 1) DOM is spiking all across Florida. With the hardest hit metros being:

Tampa: +59% YoY
North Port/Sarasota: +50%
Deltona: +45%
Palm Beach: +42%
Broward: +40%

Housing inventory in the South is now officially back to pre-pandemic norms.

Active listings in the 16 southern states hit 509,000 in Nov 2024. In Nov 2019 it was 515,000 listings.

States like Tennessee, Texas, and Florida are now well above pre-pandemic inventory and are leading the charge.

It could be argued that there is no longer a housing shortage in the South. 1) Here's the state-by-state breakdown.

Tennesse: +19.7% v 2019
Texas: +17.4%
Florida: +15.0%

It's a bit top-heavy. Those 3 states are leading the charge on inventory growth in the region.

Meanwhile - housing inventory in Virginia and Maryland is still down 40% from pre-pandemic.

Home builders now have the 2nd highest level of homes for sale on record.

Mid-2000s housing bubble was only time inventory was higher.

We're now within 19% of that peak. 1) Source of this data is US Census Bureau.

I took the number of homes either completed or under construction only, as they represent a better representation of active inventory.

Builder cycle times are now about 4-5 months for turning an under-construction house into a completed one.

Apartment rents are dropping across Florida.

With deep rent cuts hitting almost every major FL market.

The biggest is Fort Myers. Where rents are down 13% from Nov 2022. Other hard-hit areas include Naples, North Port/Sarasota, and Jacksonville.

Rents are now dropping across Florida due to an oversupply of apartment construction.

Don't be surprised if we see a big investor selloff in Florida in 2025 due to these declining rents.

Source: Apartmentlist rental data 1) Declining rents is very problematic for landlords in Florida, because many bought into the market during the peak of the bubble in 2021-2022. And expected rents to keep growing.

Some investors are already dumping properties in Florida as a result of these declining rents.

Pretty crazy stat.

82% of Americans say it's a bad time to buy a house in late 2024.

That's the most pessimistic homebuyers have ever been about the housing market.

Helps explain why homebuyer demand is so low. 1) What's amazing about these sentiment readings is that they are even worse than the early 1980s. When mortgage rates were 18%.

Back then, it was a peak of 79% who said bad time to buy.

We reached a peak of 88% in this cycle. And are currently at 82%.

Mortgage demand is down 50% from the same week in 2019.

No post-election bounce.

Sellers better start cutting prices or else it's going to be a long winter. 1) To put things in perspective: the number of mortgage purchase applications for the week ending November 20th was:

49.7% below the same week in 2019
55.2% below 2020
51.9% below 2021
22.0% below 2022
1.7% below 2023

The Austin, TX rental market is collapsing before our eyes.

With the median apartment rent dropping 15% over the last 2+ years.

The vacancies have skyrocketed. Rental concessions are everywhere.

Rents are now only 9.8% higher than pre-pandemic. Meaning that many Austin landlords are losing money, as property taxes, insurance, and interest costs are way higher.

(This is a harsh lesson on the boom/bust cycle in real estate for many developers and investors who bought into Austin during the boom. Read more below to see how this happened.) 1) Austin's rental market is being dragged down by dueling forces right now: reduced demand combined with a deluge of new supply.

At the peak in 2022, apartment developers in Austin pulled permits for over 25,000 multifamily units in a year.

And now those permits are turning into completed units and sitting vacant, forcing landlords to do big rent reductions.

Rents dropping hard north of Austin.

September 2022: $2,419/month
November 2024: $1,969/month

19% cut in two years. Owner is Tricon Residential, who is owned by Blackstone.

How far will these rents drop? And at what point does Blackstone liquidate due to negative cash flow? 1) Digging into the proforma on this rental listing, it doesn't look good.

At current asking rent of $1,969 month, Tricon will net $23,628 in gross rent.

After deducting expenses, including a massive $6,880 annual tax bill, they only net $10,163 in income.

Pretty concerning how low homebuyer demand is right now.

Mortgage apps to buy a house are down 45% from pre-pandemic levels.

Languishing at lowest level in 30 years.

And now mortgage rates are spiking again. 1) On the table below, you can see the break out of the most recent week in mtg demand from previous 5 years.

Optimistically - mortgage apps are up 1.8% from the same week in 2023. But that's where the optimism ends.

Down 19% from 2022. 52% from 2021. 56% from 2020. And 46% from 2019.

Texas housing supply has spiked to highest level since at least 2017.

Active listings are up 25% YoY, and a massive 263% from the pandemic low.

Texas is no longer in an inventory shortage. And is now over-supplied.

Cities in Texas with the most excess supply:

Austin: 42% inventory surplus
Dallas: 39% surplus
San Antonio: 38% surplus 1) The reason that listings are spiking in Texas is because home builders and investors are beginning to liquidate out of this market.

Investors are having difficulty earning cash flow due to high prop taxes and stagnating rents.

Builders are needing to do big mark downs to sell houses, which is hurting the resale market.

The biggest decline in home value from 2022 peak is in Manhattan.

Values in New York County have dropped by 21% from their mid-2022 levels.

To a typical price of $1.1 Million. Still very expensive. But a huge drop nonetheless.

Source: Zillow Value Index / Reventure App 1) Home values in Manhattan are actually back down to their 2013 levels in nominal terms.

And are back down to their mid-2000s levels in inflation-adjusted terms.

Mortgage rates spike back to 6.8%.

The disconnect between mortgage rates and real estate investor returns has never been greater.

Expect institutional investors to continue selling houses, and for inventory to keep increasing in the South especially. 1) The principal problem for real estate right now is that it's not possible to make money buying properties for cash flow at current interest rates.

Most investment properties only produce a 4-5% cap rate an unlevered basis.

And as soon as you layer debt on top of that, the properties lost money.