Pensacola Housing Market is Booming, but Are Prices Too High for Buyers?

The housing market is booming in Pensacola, Florida. This summer saw a record 6,000-plus homes put on the market in an area encompassing parts of two different counties, Escambia and Santa Rosa. Both counties were ravaged by hurricanes that made landfall over the area in 2004 and 2005. Hurricanes Ivan and Dennis wrought destruction on thousands of homes, pushing house prices through the roof. Some realtors reported the price of a house rising almost 50% over the course of just a couple of months.

As a result of the skyrocketing prices of existing homes in Pensacola, builders of new homes attempted to stimulate their own sales by offering incentives. Following the devastations of two hurricanes within twelve months and the necessity of finding shelter quickly, sales of existing homes and construction of new homes made the area a realtor’s paradise. A year after Hurricane Dennis, however, most of those who hit the area to buy for investment purposes have hit the road in search of other opportunities. In doing so, they have left Pensacola with a housing inventory glut. While market forces indicate that with a situation in which you have a huge inventory combined with low demand would equal bargain prices, that isn’t the case.

Why aren’t buyers able to take advantage of the fact that house sales in Pensacola are down an impressive 14% from last year? Isn’t it just common sense to think that when over 6,000 homes are available to buyers that those sellers would be forced to lower their price? You would think so.