It’s likely that Jacksonville isn’t the first city to come to mind when you think of Florida. Despite being Florida’s largest city by population and landmass, hot housing markets like Orlando, Tampa and Miami often outshine this coastal city.
However, Jacksonville’s general affordability, strong job market and beautiful beaches have steadily attracted new residents from more expensive coastal cities across the United States. This was especially true during the pandemic, as remote work allowed people to take advantage of a more affordable cost of living in Jacksonville.
However, the red-hot growth the market saw from 2020 to 2022 is cooling. Economic impacts from high mortgage rates, housing affordability concerns and inflation have led to less demand for housing — at least in some properties here.
As of midyear 2023, many homes are sitting on the market for longer — and in some cases, they are selling for slightly less than they were a year ago. At the same time, well-priced move-in ready homes in attractive neighborhoods are still moving incredibly fast with many seeing multiple offers.
To give you a better picture of what is happening in Jacksonville today and where the housing market could be headed in the coming year, we’ve compiled the latest information from the U.S. News Housing Market Index.
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How the Jacksonville Housing Market Changed in 2022
Single-family housing permits have steadily declined since the summer of 2021. At its peak in June 2021, Jacksonville issued over 1,800 new single-family home permits. By July 2022, that number had fallen to 980 housing permits. After falling furtherto 775 in November, there was a short-lived jump in December before the number of permits slid downward again in 2023.The sudden drop in new-housing starts is largely related to issues of affordability, both for home developers and home buyers, and concern over a slowing housing market.
This pressure isn’t only impacting the Jacksonville market, but it is a growing concern across the country. New single-family housing permits remain basically flat year over year, comparing the period spanning May through July. Year over year, July 2023 saw a small increase of less than 3% over July 2022. It’s indicates a seller’s market, as demand outweighs supply.
However, multifamily permit starts are another story.
Multifamily building permits remain strong. In June 2022, 930 multifamily permits were issued — marking the highest point in five years for Jacksonville. The level of new multifamily construction tapered off a bit toward the second half of 2022 and early 2023, but it has returned steadily over the last three months. Now, multifamily permits are near peak levels with 883 new permits being issued in July 2023, a nearly 28% increase year over year. The three months ending in July 2023, however, showed a 6% increase over the same three months in 2022.
This steady increase in multifamily housing is an effort to increase housing supply and provide more affordable housing options to residents here. However, it’s a line developers will need to tread carefully as inventory increases.
Jacksonville Housing Supply and Demand
Jacksonville’s supply of for-sale homes is around 2.7 months, about on par year over year. This level of supply is higher than the national average of 2.1 months but still below what is considered healthy levels, between 4 to 6 months of supply. It is also indicates Jacksonville is still very much a seller’s market.
Over the last year, housing supply has varied greatly. In January 2023, housing tipped above 4 months supply. This was the first time market supply was in a healthy range in nearly four years. However, it didn’t last long. Demand grew rapidly for the spring and summer house-hunting season and pushed supply levels back to nearly the same level as July 2022.
Housing supply is trending upward once again, but new deliveries of single-family homes likely won’t exceed demand for the coming year. Many sellers are still holding onto their homes because they are locked into lower mortgage rates and have fewer homebuying options in today’s low supply market. This leaves little for buyers to choose from, aside from new construction.
According to the Mortgage Bankers Association, August data shows mortgage applications for new home purchases increased 20.6% compared with a year ago. Month over month, applications increased by 4% in August, compared with July. This change does not include any adjustment for typical seasonal pattern.
As of Sept. 20, the average 30-year-fixed mortgage rate is 7.31%. The average 15-year fixed mortgage rate is 6.49%.
“Affordability has some buyers sitting on the sidelines. Many buyers have a strict purchasing budget that is hard to find in homes today,” says Matt Roberts, real estate agent and broker with Someday Homes Realty in Jacksonville Beach. “Low inventory is pushing prices higher and leading a lot of buyers to purchase new construction homes because they can’t find what they want in a resale home.”
According to Redfin, homes listed for sale in the greater Jacksonville area in August took an average of 35 days to sell, up from 31 days in August 2022. However, not all homes are taking longer to sell. Roberts says certain properties sell quickly with multiple offers.
“Renovated move-in ready homes are moving the fastest,” Roberts says. “It doesn’t matter the price point, these homes are going under contract fast. Fixer-upper homes are taking much longer to sell as people don’t have the disposable income they had a couple of years ago to update the home.” Redfin’s latest data has found “hot homes,” especially those near the beach, are pending in 16 days or less and often selling at or above asking price.
Despite affordability and supply and demand challenges across the country, consumer sentiment is up, according to a monthly survey of consumer confidence levels from the University of Michigan. As of July 2023, the national consumer sentiment index is trending upward, at 71.6 on a 100-point scale, a 20-point increase from a year ago.
Rental properties aren’t experiencing the same supply challenges as homebuying. In fact, rental vacancies in Jacksonville have held steady at 8.5% for the three months ending June 2023. This level is significantly higher than the national average of 6.3% and an indication that rental supply has outpaced demand in certain areas.
[Read: Buying a Fixer-Upper vs. Move-in Ready: Which Is Better?]
Median Home Price in Jacksonville
The median home price in Jacksonville in July 2023 was $375,000. This is down about 0.5% year over year. While this is a downward trend, it’s not necessarily alarming. The median home price is up nearly 9% from its recent low of $343,000 in March 2023. The slight decrease in recent home prices are likely related to slowed demand for homebuying in the summer (hurricane) season, as well as higher mortgage rates impacting affordability.
The median home price for the U.S. was $422,000 in July. This makes Jacksonville still an affordable area to live, especially when compared with other major coastal cities across the West and Northeast. While prices are down currently, they are trending upward overall for this year. There is still a low supply of housing which will continue to push home values up, particularly for sought-after properties and neighborhoods.
Unlike home prices, rental rates have continued to climb steadily over the last year. Today, the median rental rate is $1,831, which is 3.9% higher than last year but still about 11.2% lower than the median rent for the United States, currently at $2,062.
Rents have remained strong in Jacksonville for several reasons. To start, it has seen an influx in population growth from more expensive coastal markets over the last few years. From 2019 to 2021 its population grew by 5%, according to a LendingTree study analyzing U.S. Census Bureau American Community Survey data. People are moving to Jacksonville from New York, Washington, D.C., and Miami, according to Redfin.
Jacksonville is also home to one of the largest universities in the state, the University of Northern Florida. The school was home to roughly 16,500 students in fall of 2022, creating stable demand for student housing in the neighborhoods surrounding the campus. Jacksonville also has a very healthy and diverse job market.
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Unemployment Trends in Jacksonville
Employment remains strong in the Jacksonville market. According the Bureau of Labor Statistics, there are 802,000 people employed in the greater Jacksonville area, with nearly 40,000 jobs being added to the market over the last year. The unemployment rate has ticked upward slightly, to 3.2% as of July 2023. This is slightly lower than the national average of 3.5% and indicative of a healthy job market.
Jacksonville has long been known for its stable job market. Its ties with the transportation, shipping and distribution channels, along with the military, medical and pharmaceutical fields, and financial industry means it has a very diverse job market. Construction jobs have grown by 3,100 new positions over the last year, for a market total of 51,900 construction jobs in July.
Unemployment and cost of living are two major factors that can impact foreclosure rates and mortgage delinquencies. While the higher housing costs stemming from rising interest rates and higher median home prices are putting pressure on affordability, delinquencies remain at low levels for Jacksonville, according to data from Black Knight. As of July 2023, roughly 3.3% of all Jacksonville mortgages were 30 days or more past due but not yet in foreclosure. This is slightly higher than the U.S. average of 3.1%, but still near record lows.
Even the percentage of Jacksonville homes in active foreclosure is low. According to Black Knight, 0.5% of all homes in Jacksonville are in active foreclosure, which is in line with the national average.
Builder Confidence in Jacksonville
Residential home builder sentiment for the Jacksonville region remains positive, according to the NAHB/Wells Fargo Housing Market Index. Jacksonville scored 55 in July 2023, the same level as the year prior, though it has improved 20 points since December 2022. The index attributes a positive outlook to scores above 50.
National construction costs have come down notably since the end of 2022, which is likely helping ease concerns over new construction affordability. On the other hand, construction is down month over month and year over year for nonresidential buildings, which is tracked by the Architecture Billings Index from the American Institute of Architects. Construction for nonresidential, commercial properties has fallen dramatically from the highs of early 2022.
Jacksonville Real Estate Market: Predictions
Given Jacksonville’s strong job market, general affordability (compared to many other high-cost cities) and low supply of housing, there is a good chance the housing market will remain steady for months to come. Seasonal homebuying swings and high mortgage rates could continue to put pressure on home prices for the time being, but homes in desirable neighborhoods or in move-in ready condition should continue to move quickly.
Florida is still a very attractive market for many. Zero income taxes and favorable weather will continue to draw new residents, especially with the opportunity of remote work. A slowdown in the number of new home deliveries and the current housing supply will likely cause prices to trend upward again.
With that being said, rents could start to reverse in the coming months as supply outpaces demand. Today’s higher vacancy rate is indicative of increased supply already, and the large number of new multifamily permits right now could only exacerbate the situation.
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Jacksonville Housing Market Forecast originally appeared on usnews.com
