State of the Market: Northeast Florida First Quarter Update

The first quarter update on the real estate market in Northeast Florida paints a picture of challenges and opportunities for both buyers and sellers. The persistently high mortgage rates and increasing home values have made it difficult for buyers to afford homes, prompting sellers to get creative in attracting them, especially in the middle market segment.

Despite inventory levels remaining historically low, they are higher compared to the previous few years, leading to increased competition in some areas for sellers, while giving buyers more negotiating power. The available inventory of homes for sale in Northeast Florida is up 67.6% year-over-year, now sitting around 3.1 months supply of inventory; however, the balance of power still leans towards a sellers market. The median sales price is up 6.6% year-over-year with anticipated home values to continue increasing over the next calendar year. If rates drop as expected, we could see the median sales price increase as much as 11-13% over the next year. 

The Federal Reserve has hinted at lowering rates later in the year, but the exact timing remains uncertain. This uncertainty adds another layer of complexity for both buyers and sellers. Additionally, the impending settlement with home sellers by the National Association of Realtors, scheduled for July, is causing the industry to prepare for upcoming changes. While many aspects will stay the same, adjustments will be necessary for real estate agents and the buying and selling public alike.

Buyers are holding off on purchases, waiting for rates to decrease by at least 1%, while sellers with low-interest mortgages who are “golden handcuffed” to their homes are staying put, further exacerbating the shortage of homes for sale. Global conflicts, such as those in Israel and the Middle East, have also caused investors to pause, impacting the market. These global conditions will be watched closely as to how they affect the market in the short term. The national elections may also cause a slow down come early fall as buyers and sellers put their plans on pause until after the election results, a completely normal phenomenon that happens each election year.

In summary, the real estate market in Northeast Florida is characterized by challenges posed by high rates and low inventory levels, coupled with uncertainties regarding future rate changes and impending industry regulations. Both buyers and sellers must adapt to these dynamic conditions to navigate the market successfully. Now more than ever before it’s paramount to hire a local, full-time real estate advisor to help navigate a constantly evolving market.