Ethan’s Northeast Florida Housing Market Update February 2023
Ethan’s Northeast Florida Housing Market Update
Market Turning Normal and Buyers Coming Back
After a bumpy 2022, we are seeing 2023 kick off with a return to normalcy. Gone are the days of super-low inventory levels and crazy bidding wars for houses. Now we are seeing price negotiations, more days on the market, and seller concessions.
Looking back at 2022 the total number of closed sales looks a lot like 2018 & 2019. The total number of units sold in 2022 is only slightly below those years and indicates we are returning to a more normal and stable real estate market. With interest rates still holding higher buyers’ affordability has continued to struggle. The affordability index is down 34.9% year over year. The index takes into account interest rates, prices, average salary, employment levels, and more to determine the affordability of a region. And the past year has been tough for buyers. So, it is no surprise that as we entered the normal seasonal winter slowdown we saw more buyers than usual taking a step back. Here are a few key stats to illustrate the point.
Inventory is Up!
The month’s supply of inventory for January 2023 jumped up to a 4.7 month’s supply. Most experts agree that around a 5 month’s supply is typical of an even balanced market. So in my opinion, we are there. With that increased listing competition the bidding wars have left most areas. The list-to-sales price ratio came in at 96.7% in January and is dropping. That coupled with the percentage of homes closed over list price down to 9.7% is indicating that buyers are submitting competitive offers and sellers are negotiating much more than they had in the past few years.
During the end of 2022 we saw a sharp drop off in buyer activity. But, that has turned around in 2023. Buyers have come back to the market strong to start the year. On my own listings, I have seen showings increase by 56% since the start of the year. And, market wide we are seeing pending sales increased 29.1% from December to January. That is a big jump considering the typical home-buying season doesn’t really kick into gear until March.
So why are buyers entering the market right now?
Affordability is still a concern. That has been helped recently by the drop in 30-year mortgage rates. Many lenders can now quote a rate of just below 6% and that number keeps dropping into the high 5s regularly across our market. Additionally, I think buyers who saw the market as overpriced or not wanting to get into bidding wars the past 2 years have now come around and started shopping again. March 2022 appears to have been the peak of activity in Northeast Florida. After that, we saw buyers slowly pull back and wait to see the direction of the market. Now, I feel that buyers have a grasp of the direction and feel strongly about moving forward with a home purchase. Rates are still historically low and now there is less competition for the homes they want. So why not jump in now?
Let’s round off our talk by recapping a few stats showcasing the market’s return to balance:
Days on the market averaged 55 days. A balanced market usually averages around 60.
Active listing inventory is at 5,234 and has hovered around that number for 5 months.
The home affordability index has bounced around its current level of 76 since April of 2022.
I hope this information can give you direction in making your decision to buy or sell and enter the market during this exciting time.