Ethan’s August Northeast Florida Housing Market Update

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The Dog Days of Summer

This time of year is known as the dog days of summer. The heat drags on and with fall coming fast many are counting down the days waiting for cooler weather to roll in.

This analogy could not be more appropriate for the real estate market in Northeast Florida last month. July saw median prices dragging on and going higher. While inventory has spiked tremendously indicating a cool down is in sight.

The dog days of the current housing cycle shows the heat is still high on prices. Prices increased 0.8% from June 2022 to July 2022. That is still a big gain for one month and 20.9% higher than the same time last year. This shows continued strength in the market and buyers are still seeing value in the prices for homes in our market. But, prices are always a lagging indicator in any market. Demand has to drop before prices start to adjust. And, we may be at the very start of that change in the market right now.

Cooler air is on the way, but is the housing market cooling down?

The cool down on the horizon that will provide relief for these hot dog days of summer is evident in the listing demand shown in our graphic. All indicators point to increasing inventory and decreasing buyer activity. The most telling statistics are these:

  1. Months supply of inventory was up 45.6% from June to July 2022. That is a staggering increase in only 1 month.
  2. Days on the market are up 84.6% from this same time last year.
  3. There are 25% more homes active on the market that this same time last year. 10% of that change came in July alone.
  4. All this increase in inventory has come with new listings being down almost 15% from this same time last year. And 12.4% lower from June to July.

So even despite less homes coming on the market as new listings we are still seeing inventory skyrocket. This is a direct indicator of buyer interest and activity going down. Couple that with pending sales (homes placed under contract) being down 34% from July 2021 and its obvious that the increase of interest rates and prices has combined to put many buyers out of the market due to affordability. In the past 12 months the average mortgage payment in Jacksonville has increased $500-$600 due to the increased prices and interest rates. That is a lot of money in mortgage payment for buyers. Especially first-time home buyers and people on the lower to moderate income scale.

In addition to our local market, Fannie Mae’s Home Purchase Sentiment Index indicates that right now only 17% of prospective home buyers think now is a good time to buy. And, the share of sellers who think it’s a good time to list their homes dropped to 67% in July from 76% two months prior

Will this slowdown lead to lower housing prices?

The answer is it is still too early to tell. Prices could drop, level off or rise. And, interest rates have recently moderately to the lower 5’s. We just won’t know for another 6-12 months what that trend will be. Like I said before prices are a lagging indicator. Price predictions will just depend on how long and deep this drop in buyer activity will last.

I hope your summer has been great and I look forward to working with you on all your home sale needs!

Happy house hunting!