Surging Inventory in Florida and Texas Signals Potential Housing Market Decline
The real estate markets in Florida and Texas are showing signs of a significant downturn as housing inventory surges, a trend that could lead to notable price declines, according to real estate analyst Nick Gerli. Meanwhile, housing prices in the Northeast continue to appreciate amid historically low inventory.
Florida and Texas: The Boom-and-Bust Cycle
During the COVID-19 pandemic, Florida and Texas became prime destinations for people relocating from colder, more expensive regions. The increased demand triggered an unprecedented construction boom, with the two states leading the nation in new housing developments. However, as in-migration slows post-pandemic, the once-thriving markets in these Sun Belt states are facing a sharp cooldown.
Gerli, CEO of real estate analytics platform Reventure App, noted in a post on X (formerly Twitter) that "the Florida and Texas dominos have fallen." He highlighted that inventory levels have skyrocketed, signaling a shift in these markets.
Market Imbalance: A Stark Contrast
Data from Reventure App underscores the stark contrast between the Sun Belt states and the Northeast. In January 2025, Florida and Texas had a combined total of 261,000 active listings—207% more than the 85,000 listings reported across all Northeastern states.
"Prior to the pandemic, these regions were the same," Gerli wrote. "The gap between the two highlights the very bifurcated nature of this housing market. The downturn is happening in TX/FL, but we are still suffering a historic inventory shortage in the Northeast."
Despite this trend, Gerli claims that many real estate outlets have been reluctant to acknowledge the downturn in Florida and Texas. "These are the states with the most realtors, investors, wholesalers, and people who buy housing market-related," he said, suggesting that vested interests may be downplaying the shift.
Conversely, the Northeast, with its relatively low investor activity, is experiencing a different reality. "Too few homes for sale means high competition and even bidding wars, still," Gerli added.
Expert Opinions: A Buyer’s Market in Florida and Texas?
Despite concerns over falling home prices, some analysts see an opportunity for buyers in the cooling Sun Belt markets.
Redfin economist Chen Zhao previously told Newsweek that Florida and Texas could be the best markets for homebuyers in 2025. "Buyers in the weaker Sun Belt markets such as Florida and Texas may be able to negotiate the best deal and have the most selection," Zhao said. "In other markets, inventory will be lower, and there will be less room to negotiate."
Matthew Walsh, an economist with Moody’s Analytics, also pointed out that Florida’s overvaluation during the pandemic makes it an intriguing market to watch. "Home prices there have risen very quickly and have kind of exceeded the pace we would expect home prices to grow at given economic fundamentals in the state," he explained. "That disconnect really does weigh on prices when demand starts to cool."
Looking Ahead: A Market Reset?
Despite the current downturn, Gerli sees this shift as a long-term benefit for Florida and Texas. "What many in the real estate industry fail to realize is that a downturn in the Sun Belt will actually be a good thing for the housing market in the long term," he said.
According to Gerli, for homebuyers to re-enter the market in large numbers, prices need to fall. "For prices to drop, inventory levels need to go up enough to force sellers into meaningful price reductions. In Texas and Florida, that’s happening," he stated.
For now, Florida and Texas are experiencing the market correction that analysts have been anticipating, while the Northeast continues to grapple with an inventory shortage that is keeping prices high. As 2025 unfolds, the question remains: will the Sun Belt’s price drop be enough to lure buyers back, or is this just the beginning of a deeper housing market correction?
