Southern Housing Boom and The Great Reshuffle 

Let’s be honest, here in the South, we know how good we have it, right? Well, the housing market data has shown in recent years, the entire country knows how good we have it down here too.

Check out this chart from our partners at LPL Research.

This shows U.S home sales by region going back to 2007, which was the beginning of the Great Financial Crisis. You can also see the two gray shaded areas, indicating our last two recessions.

As you can see, more homes have been sold in the South than any other region for the past 16 years. You can also see that during the COVID pandemic, home sales skyrocketed in the South.

This has been called the Great Reshuffle. Given the fact that more Americans were working remotely, and in many cases, could live anywhere they wanted to live and work from home, millions decided to uproot from higher cost of living states, to lower cost of living states.

You could also argue that lots of families also left states where there were more COVID restrictions, and moved to states that were less.

Postal Service Data and Market Trends

The U.S Postal Service processed about 36 million address changes in 2021. But, by last year, that number had dropped 28 million.

As you can see on the chart, home sales are dropping significantly, especially in the South.

Obviously, a big reason is mortgage rates were unusually low in 2021 and have shot up with inflation in the past three years. But, LPL Chief Economist Jeffrey Roach theorizes that part of the reason is the Great Reshuffle may be over. He notes that opportunities for remote work are likely shrinking as the labor market cools, and corporate policies are getting less flexible on work arrangements.

Current Housing Market Dynamics

Overall, home sales fell by 5% in June. Another sign that the economy is slowing down.

But, there’s no reason to panic. In fact, housing demand is still strong. Median home prices continue to rise. In fact, the median home price in the U.S. is $426,900. That’s an all-time high. Homebuyers continue to struggle to find a home. Inventories are still historically low because homeowners who didn’t relocate have little interest in getting out of a mortgage at a low interest rate and buying a home with a higher rate.

So, prices keep going up. Couple that with higher mortgage rates, and housing affordability is tough.

Affordability Crisis and Potential Solutions

The National Association of Realtors says affordability is the lowest its been since the 1980’s.

So what can help improve the housing market? The obvious answer is lower mortgage rates. If the Federal Reserve cuts interest rates that should impact rates. That would make a house more affordable, but also entice current homeowners to sell, which would increase the housing supply.

The opinions voiced in this video and blog are for general information only and are not intended to provide specific advice or recommendations for any individual.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance. Independent Advisor Alliance and GenWealth Financial Advisors are separate entities from LPL Financial.