House prices, inflation and rising interest rates will soon create an equilibrium in the housing market, according to the FAU researchers, although prices will remain high.
JACKSONVILLE, Fla. — The booming Jacksonville-area real estate market has left home prices a bit inflated, according to two academics warning that slumps for home sellers across the state may be ending.
“If you’re buying a home in these metros across Florida…it’s imperative that you know you’re buying near the top of the market,” said Ken H. Johnson, an economist at Florida Atlantic University who has researched the house prices. nationwide with Eli Beracha, a professor at Florida International University.
The researchers don’t anticipate a market collapse, but they say the rush of buyers that drove prices up nationwide last year may soon ease significantly.
“Mortgage rates have been near all-time lows for the past two years and have helped keep housing demand high during the pandemic,” Beracha said in a statement on their research, expected to be released. in a scientific journal on housing. “Now we’re seeing rates go up, and that’s going to pull some buyers out of the market and reduce price gains.”
Jacksonville may already be seeing signs of a slowdown, Northeast Florida Association of Realtors President Mark Rosener said. But he said the area’s demographics and a stream of investor buying and renting should help support the market slightly, even after a year of median single-family home prices rising 22%.
“It’s not going to be dramatic,” Rosener said.
Last year’s price hikes added to the costs of Jacksonville homes that researchers say have become more expensive than most, ranked 36th on a list of 100 metropolitan housing markets across the country, but only in eighth of nine Florida markets measured by the researchers.
The researchers used 25 years of data to track prices by market and estimate an “expected” price on a typical home in each market, then compared it to a Zillow index of actual prices for each market.
The price of the Jacksonville index ended December at $321,420, about 32% above what researchers considered an expected price of $243,019.
Since the rankings were based on the percentage markup over the index price, Lakeland the index price of $271,809 – about 43% above the expected price – was considered the most overvalued market in the state and 12th nationally. At the other extreme, always expensive Miami-Fort LauderdaleThe index price of $397,603 – with a premium of around 21% – was ranked the cheapest metro market in Florida and 60th nationally.
If the prices searchers expected were correct, overpaying apparently became the norm almost everywhere.
Of the 100 markets in the study, only one – Honolulu, Hawaii – had an index price lower than expected, and only by 0.1%. Baltimore, New York, Virginia Beach, Va., and Washington, DC were the second least overvalued, the researchers concluded.
Rosener said other metrics, like the Case-Shiller home price index, have already made realtors aware that prices in Jacksonville are rising faster than in many places. But he said local conditions still looked good for the housing market, absent the exuberant increases seen last year.
The region’s relatively young population includes many millennials who fall into age brackets where people are more generally interested in buying a home, Rosener said. Additionally, he said, the area has been attractive to investors wanting to buy homes that they can own as rental property in an area where the population is growing and apartment rents are rising.
Luxury homes also became more attractive to affluent buyers who saw real estate as a more reliable place to hold their wealth than stocks or cryptocurrencies.
After two years of pandemic conditions changing home buying and selling routines, Rosener said Jacksonville may experience a more routine “real estate seasonality,” with slower winters, busy springs and inventory which could increase in the coming year. builders are gradually solving more supply chain issues.
He said preliminary January deal data suggests fewer sales were completed in the past month, but the number of open deals, where homes are under contract, has increased.
Despite talk of overvaluation, Rosener said Jacksonville’s housing market is fundamentally different from the overvalued pinball market that fueled the Great Recession in the mid-2000s.
“People are buying houses to live in. They don’t buy houses speculatively,” he said. “If you’re buying a house to live in and raise your family…that’s your motivation. You don’t consider it a quick win.
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