Spring is in the air, and this year the strong wave of homebuyers arrived early. In Northeast Florida closed sales in March were up 18% in units year over year, and March pendings are up a whopping 29.8%.
As a firm, Berkshire Hathaway HomeServices Florida Network Realty closed 49% more units in March 2015 versus March 2014. These numbers are very strong. The environment for a purchase or sale is appealing right now based on the interest rate factor, which is keeping the cost of home ownership low while prices improve from their recession levels. The housing market continues to drive economic recovery, as the peripheral results of real estate transactions are job creation and the introduction of more money into local communities.
The First Coast Beaches (Ponte Vedra Beach, Atlantic Beach, Neptune Beach and Jacksonville Beach) residential market remains healthy, and our amenities continue to expand. As for the challenge of continued stability for the housing market, the solution remains additional inventory. Simply put, more listings.
With the moderate closings from January and February of this year, the numbers look reasonable over a six month average when compared to last year. The absorption rate crept up just over the equilibrium number of 6 months, with an average absorption of 6.31 months from October 2014 through March 2015. This has softened from the same period last year, when the average rate was 5.6 months. The interesting number is the most current month, March 2015 where the absorption rate dropped to 5.5 months, indicating a need for more supply to keep up with demand. One month does not make a trend, so we will keep an eye on these numbers.
In our office, current month written contracts are on pace to be as strong or stronger than in March. Absorption rate is the amount of time it would take the current demand level to absorb the available supply. When the number dips below 6 months, it indicates a seller’s market. An absorption rate of greater than 6 months indicates a buyer’s market. This number also fluctuates based on the market price segment that is being analyzed. Average sale price for the Beaches residential market year over year is up from $401,012 in March 2014 to $476,146 in March 2015 which is 20% higher. This increase is based on both appreciation and the mix of properties sold moving into the higher end. Days on market has stabilized as the market attempts to normalize, with an average of 97 days over the past six months which is identical to the same period last year.
For sellers of real estate, it is very important to recognize the excellent environment right now to get properties sold. If the decision to sell has been made, waiting to time the market is not advisable. The laws of supply and demand are at work – we still have limited supply (though moving towards normal) and strong demand. Also, it makes sense to keep an eye on where you will go. Especially for those moving up with financing involved, you can save a lot of money over the years by taking advantage of today’s rates. Your potential buyer pool is still substantial across all price ranges, and we see continued strength in our luxury market as well. Now may be a superb time to sell if you are looking to make a move.
The greater Jacksonville market has bounced back stronger than the state, as home values in Florida are still off 32.6% from their peak in October 2006 (CoreLogic 3/3/15). Good buys are still out there locally across all price points, and are found with solid research and analysis. The purchasing power factor is still very appealing, and will slip at a 10% rate for every 1% increase in the 30 year fixed rate mortgage. The experts believe we will see interest rates move up approximately 1% over the next 12 months. In terms of dollars, in order to keep the payment the same on that $400,000 mortgage you might get today, you would only be able to finance $320,000 if the rates move 1%.