Robust buyer demand fueled by low interest rates, historically low residential inventory and the continued desire of out-of-staters to move to the Sunshine State has caused Northeast Florida’s housing prices to surge.
In May, the average sale price jumped to $363,044, a 26.1% increase from a year ago, and a marked change from April’s average of $357,438. In similar fashion, Northeast Florida’s median sales price rose 16.9% from a year ago to $290,000, a significant gain from April’s median price of $284,941.
Since May 2020, new listings in the region rose 12.7% to 3,785. Pending sales leapt 18.5% to 3,672. Meanwhile, residential inventory levels fell 57.9% from May 2020’s level of 9,147 units to 3,847 units.
“The frenetic spring home buying season continued through May, with 41% of closed sales receiving more than the original listing price,” said Missi Howell, president of the Northeast Florida Association of Realtors. This represents a 188.7% increase over a year ago, when the percentage was 14.2.
“Realtors report that most listings are receiving double-digit multiple offers, and Florida Realtors has reported that closed cash sales in the Greater Jacksonville Metropolitan Statistical Area (MSA) increased 161% compared to same time last year,” Howell said. “Even though our inventory compared to last year has increased, the demand has increased more, reducing to 1.1 months overall supply of homes available to purchase.”
As prices go up, the region becomes increasingly less affordable as represented by a housing affordability index of 121, which is a 12.3% decline from May 2020. This means that the region’s median household income was 121% of what is necessary to qualify for the median-priced home under prevailing interest rates.
“In the $100,000-to-$300,000 price range, which is where our population of the low- to moderate-income buyers would look, we have less than a one-month supply of inventory, putting the dream of homeownership for many out of a competitive reach,” Howell said. “The trend of high demand and low inventory is expected to continue through the year, as new construction supply lines continue to lag and existing homeowners are reluctant to sell due to higher purchase prices, unless they are moving out of the area.”
Because there is a limited supply of existing homes for sale, some hope that builders will provide a boost of inventory to help meet demand. However, the increasing cost of construction materials and labor, along with supply chain challenges, is contributing to higher construction costs, which many builders are passing along to homebuyers.
Although rising sales prices and the reopening of the economy may draw more sellers to the market, it is anticipated that there will be a low level of inventory in the Northeast Florida region for the foreseeable future, according to the Realtors association.
