By CHUCK GREEN
During the pandemic homebuyers fled to southern states for warmer weather but now would-be purchasers are bailing out of deals at a faster clip than anywhere in the country.
According to analysts at Redfin, 60,000 deals were called off nationally in September. That’s 17% of the homes that went under contract that month.
In Florida, Jacksonville had 745 home-purchase agreements fall through, equal to 30.3% of homes that went under contract.
That was the highest percentage among the metros Redfin analyzed. They were followed by San Antonio, TX (25.3%), Atlanta, GA (25%), Orlando, FL (24.6%), and Tampa, FL (24.5%).
In August, about 800 home purchase agreements were tabled in Jacksonville. That’s 26.1% of homes that went under contract that month.
They were followed by Las Vegas, NV (23%), Atlanta, GA (22.6%), Orlando, FL (21.9%), Fort Lauderdale, FL (21.7%), Phoenix, AZ (21.6%), Tampa, FL (21.5%), Fort Worth, TX (21.5%), San Antonio, TX (21.1%) and Houston, TX (20.6%).
What’s prompting this trend of deals hitting the rearview mirror where, well, the sun does shine?
“It’s significant and raises a few questions. Was the migration to the Sun Belt a temporary result of the pandemic? What will be the impact of the devastation caused by Hurricane Ian on purchases in the Sun Belt?” Professor Suzanne Hollander, a real estate attorney and broker in Miami, said in an interview with The Mortgage Note.
According to Hollander, also the author of the blog professorrealestate.com, a factor is that the Sun Belt states experienced a wave of migration during the pandemic increasing demand for homes located in these areas, leading to increased purchase prices.
“The demand has cooled now partially because of the increase in interest rates and the prices haven’t yet come down so this may be a factor,” Hollander said.
A shift away from remote work may also be to blame as Hollander said Southern states traditionally don’t have employment with high-paying salaries to support these home purchases.
Oleg Bortman, associate broker & co-Founder at The Brokery, a residential real estate brokerage based in Phoenix, is somewhat dubious of Redfin’s findings, at least as it applies to her state, she explained to The Mortgage Note.
“I don’t know if they looked at a certain price point, certain zip codes, etc. To bundle a whole city like Phoenix, which is one of the largest cities in area size and has probably over 50 zip codes, is probably not telling the whole story. A city as large as Phoenix has so many different price points, and that would skew the data as well,” Bortman said.
What are realtors to do?
John Kobierowski, president and CEO of ABI Multifamily in Phoenix, told The Mortgage Note they underwrite the properties with more margin, market the properties to a wider audience, and vet the buyers very well.
“Sometimes the higher offer in price isn’t the best offer in probability or surety of closing,” Kobierowski said. “I think the failures of escrows is in direct proportion to the number of sales. So again, the Sun Belt leads the country in sales activity, therefore more sales will cancel.”
Hollander said realtors need to care about this because they only get paid when the deal closes.
“Realtors need to monitor their markets and educate their buyers and sellers on the trends. If buyers are backing out in a local market, realtors should price the homes realistically. Realtors should also prequalify their buyers before showing properties,” Hollander said.
Realtors may consider asking the seller if they want to allow a contract with many contingencies. Sellers don’t have to agree to this, Hollander said.
Editor Kimberley Haas contributed to this report.
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Email story ideas to Editor Kimberley Haas: [email protected]