Real Estate Market Update Fall 2023

In a recent article in the Atlantic, Annie Lowry asks the question, “Has the American labor market ever been better?” “Not in my lifetime” is her answer, “and probably not in yours either.”  

She cites the jobless rate of 3.8 percent and robust, blockbuster 336,000 new jobs in September, with wage growth exceeding inflation. Her main thesis, however, is that “the gap between how the economy is and how people feel things are going is enormous.” She coined the phrase “The Economic Annoyance Index” to describe the personal discomfort that characterizes most American’s current attitude toward the economy. 

The people who purchased a home three or more years ago are likely sitting on record property appreciation and enjoying very low mortgage rates. However, those homeowners are likely very reluctant to consider moving or downsizing right now due to high replacement costs and mortgage rates that have climbed above 7%. 

As a result, the number of homes for sale is scarce and inventory levels have continued to drop nationally and locally for many months. In fact, nationally the annualized rate of residential real estate sales is now below four million---compared to boom years where sales were close to 6 million. In the Jacksonville MLS, there are only 1911 homes for sale, while the number of real estate agents is close to 12,000 — one listing for every ten agents!   

Our team has been watching the local real estate market and adjusting our behavior to reflect the changes we’re seeing. Key statistics for the Northeast Florida market (as reported by The Market Distillery) include:

• 73% of homes listed sold in less than two months. Homes in good condition and properly priced sell quickly. Even with rates climbing, the market continues to move forward. Two factors are causing houses to sit longer in 2023 than 2022: higher financing costs and over-market pricing.
• The average sale price for a home in NE Florida is $450,00 and 60% of the total sales were $400k or less. 
• The average sale price varies dramatically based on location. For example, the average price of a home in Ponte Vedra Beach (for the last six months) was $1.35M, dramatically higher than the rest of Northeast Florida. 
• We are still seeing a significant increase in those moving from other parts of the country, particularly New York, Washington DC and South Florida. These buyers are moving from areas with higher property values and attracted by the quality of life, lower taxes and good schools. This movement to our area is not expected to slow down in the near future. 
• Overall, our local market is resilient. However, we’ve noticed buyers and sellers have very different expectations when it comes to negotiating terms. 
• The changing market has forced sellers to make more concessions both in terms of repairs and cash credit to buyers to assist with closing costs. New construction sales, in particular, are upping the concessions. Builders are offering thousands of dollars in buyer concessions in the form of interest rate buy-downs and cash at closing. 
• The sale of new construction homes is way up in our area. For example, 23% of this year’s closed sales were new construction vs. 17% in 2022.   

The Ponte Vedra Beaches and Nocatee pulse through October (based on the Northeast Florida Association of Realtors information) is:

• The median sales price for single family residences was $844,500 in September, up 12.8% from a year ago, but a 15.6% decline from a month ago. The shift in inventory and source of sales to more new homes may account for the recent drop. 
• Closed sales were up very slightly from a year ago, and median days on the market are up 8.9%, to 43 days. Homes are still moving fairly quickly and the average list-to-sale ratio is 96%. Where we do see a change is that only 5% of homes are closing at over list price.  So, again, sellers who price their home appropriately and are willing to make some buyer concessions should have a positive outcome.
• New listings were up 34% from this time last year. Active inventory is also up 32% from a year ago. 

While the economy remained strong throughout the third quarter, and into the fourth quarter, consumers remain pessimistic about future market strength with a significant number of people believing that we are headed for a recession. Pundits have been predicting a recession driven by higher interest rates for most of 2023 so the public reaction is no surprise. What is surprising is that the economy has been so hard to predict. Third quarter US earnings reported as recently as Oct 25th continue to defy more pessimistic prognostications — with 81 of the 118 S&P 500 companies who have reported so far, beating analysts’ expectations (NYTimes 10/25/23).  

In summary, many of the overarching predictions made over the last year about home sales dropping have not happened in Northeast Florida. Our market remains resilient and values are still very strong. Homes are selling, when priced right and when sellers are reasonable about making repairs. Given the volume of people still moving to our area, driving demand up, we do not foresee a drop in prices which many economists have predicted. Our approach to real estate is “back to basics.” Well-priced properties in good condition will continue to sell!