The first quarter of 2022 was a wild ride! When we compare the number of closings with years past, the numbers suggest a more “normal” seasonal market. The actual day-to-day was anything but normal. Our team’s new listings all sold for above list price - even properties that came to market with “aspirational” prices. In multiple offer situations, our buyers won the contract in most cases; however, many of those buyers started out in second or third backup position. Their patience won the deal.
As we move into the second quarter, our team is feeling a bit of a slow down in the market. The increase in mortgage rates is limiting some buyer’s purchasing ability. The volatility in the stock market, the threat of inflation and concerns about world events are all suppressing the overall enthusiasm for big purchases.
We are all aware that home values are increasing at a dramatic rate. The Jacksonville Business Journal (April 8, 2022) described a study conducted by Clever Real Estate. This study reported that since 2000, the average increase in home values nationally was 156%. In Jacksonville, that increase was 175%. Here’s where the numbers get tricky –- the average rise in income since 2000 in Jacksonville is only 7%. Incomes here in Northeast Florida are not keeping pace with inflation. The “average” Jacksonville resident who earns $38,000 per year simply can’t afford to purchase a home. No wonder we’re seeing such a huge increase in the number of new apartment developments!
The Northeast Florida Association of Realtors just published the first quarter numbers for our area. Here are the changes year-over-year:
- Median home sale price was up 25%
- Number of closed sales was down 5.6%
- Number of new listings was down 8.2%
- Active inventory was down 20%
- Month’s supply of inventory was down 15.9%
- There is one month of inventory currently on the market (a “balanced” real estate market has 6 months of inventory)
In the past, new construction has functioned as a stop-gap when inventory of re-sales was low. We’re finding that today new construction purchases can be unpredictable, both in terms of pricing and an actual closing date. In our area, there is a shortage of subcontractors (electricians, plumbers, carpenters, etc.), causing many builders to delay construction until those subcontractors have availability. Additionally, the increased demand for building supplies and continued supply chain issues have created a huge increase in building costs. For example, one of our favorite new home builders, Tidewater Construction, just published a list of price increases that have occurred over the last 6 months:
- Garage Doors: 54% increase
- Insulation: 48% increase
- Cabinetry: 19% increase
- Soffits: 45% increase
- Gutters: 26% increase
- Drywall Board: 17% increase
- Truss: 63% increase
- Roofing Shingles and Underlayment: 10-16% increase
- Hardwood and Tile: 5% surcharge
- HVAC: 13% increase
As we move into summer, which is usually our busiest time of the year, we’ll be closely monitoring the real estate market as well as the financial markets. We want to be proactive rather than reactive so we can best meet our customers’ needs.