Zoomtown faces potential bankruptcy, and experts say the housing market may be overvalued by as much as 40%.
Cities such as Austin, Texas, and Jacksonville, Florida, which have seen residential real estate prices soar over the past four years, could collapse, Nick Gerli, CEO of Reventure Consulting, said in an interview with CNBC.
“Towns that have boomed during the pandemic have become incredibly expensive over the last couple of years,” he said. “Some are overvalued by 20, 30, even 40 percent.”
Gerli, of real estate data firm Reventure, said Texas, Florida, Tennessee and Arizona markets are seeing rising inventory, a leading indicator of falling prices, and that a sudden drop in demand for Airbnb, which surged during the pandemic, has led many investors to flock to key Zoom town markets, helping to drive up prices.
“The collapse of Airbnb has definitely impacted the inventory growth we’re seeing in Texas and Florida,” he said.
In Austin’s case, Gerli has predicted a housing bubble burst for years, saying in 2022 he expects home prices to fall as much as 40% by 2025.
“The Austin market is truly collapsing,” he said in an interview.
While property prices are up year-over-year in the Texas capital, they’re down to $585,000 in 2022 from a high of $667,000, according to Redfin.
