Third Quarter Real Estate Market Update Fall 2022

By

Lisa Barton

on

11/14/2022

Third Quarter Real Estate Market Update Fall 2022

Multiple increases in the Federal Reserve interest rate have dominated the national real estate market over the past months.

Due to four consecutive hikes, year-over-year 30-year mortgage rates have jumped from 3% to more than 7%. These changes, along with inflation fears, have largely reconfigured what was until recently a supercharged sellers’ market. The Fed is highly focused in driving down inflation, and their primary tool—interest rate hikes—directly impacts real estate. Some of the hottest regional markets are now beginning to experience declining prices, after several years where prices rose an unprecedented 40 to 50%.

Throughout the third quarter of 2022, we’ve seen a continued shift in our local real estate market. The hysteria that defined real estate last year and the first half of 2022 has definitely cooled. The dramatic rise in interest rates has severely cramped buyers’ purchasing power. For example, in January when interest rates were 3.1%, a buyer with a 20% down payment could purchase an $800,000 home and have a $3500 per month payment. That same buyer, at today’s rates, could now only qualify for a $537,000 home. Many of our buyers are stepping back and waiting to make a purchase until “things settle down.”

Our fear is that these buyers who are waiting on the sidelines will be waiting for a long time — prices in our area aren’t showing strong signs of softening. First time home buyers are being hit with a triple whammy right now: higher interest rates, increasing home values and crushing increases in the cost to rent. Rates for rental properties rose over 14% since last year. While purchasing a home is a sound investment, the changes to the market are making it harder for young buyers to save for a down payment.

Despite the negative news in the national media about interest rates and a pending recession, the Ponte Vedra Beach and Nocatee real estate markets continue to hold firm. Here are the recent statistics for the end of October 2022 for Ponte Vedra Beach and Nocatee areas (according to the Northeast Florida Association of Realtors):

  • The median sale price is up almost 22% year over year (October 2021 to October 2022).
  • The number of closed sales is down 7.6% year over year.
  • The median days on the market is up to 44 days, but well short of historical averages in a balanced market. By definition a “balanced” market has approximately 6 months of inventory available.
  • Price per square foot is up 23% to an average of $348/ft.
  • Pending sales are down 18% (which is to be expected considering the rise in interest rates).
  • New listings are up 41%, but we still only have 2.8 months of inventory which, by definition, is still a “sellers’ market”.

Our team is noticing big changes in buyer behavior. Here’s what we’re seeing:

  • First-time homebuyers and younger buyers without cash on hand are essentially shut out of the market.
  • Most buyers who can afford to buy are slightly older and aren’t willing to consider a home unless it’s move-in ready — or is offered at a discounted price. We are strongly encouraging our sellers to make any necessary repairs and updates before putting their home on the market.
  • Cash buyers are still in the market, but those buyers are looking for big discounts in prices.
  • Local new home builders finally have inventory available, and those production builders are more willing to negotiate than they have been in the last two years.
Lisa Barton

Lisa Barton

Lisa Barton, the owner of Lisa Barton Team Ponte Vedra Beach - Keller Williams Realty Atlantic Partners, is a top real estate agent in Ponte Vedra Beach and the surrounding communities. Lisa specializes in luxury real estate sales, including gated communities, waterfront properties, and estate homes. A graduate from the University of Florida and George Mason University, Lisa currently resides in Sawgrass Players Club with her husband.

The Lisa Barton Team of Ponte Vedra Beach

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