JACKSONVILLE HOUSING 1Q19: Housing Conditions Remain Positive while Affordability Pressures Continue in the Market; Still No Signs of a Bubble
- Quarterly new home starts were up only 1% YOY, while annualized starts are up 6% from 1Q18 levels.
- Closings are up 7% YOY for the quarter, and annual closings are up 11% over 1Q18 numbers – welcome news as increased closings help keep inventory in check.
- While affordability concerns remain, there are no signs of a bubble. The upside of price appreciation is that Florida is close to recovering all of the home equity wealth lost in the housing market collapse
- Unemployment is at the lowest level since 1990, and according to CBRE, employment growth makes Jacksonville one of the top markets in the Southeast.
Metrostudy’s 1Q19 survey of the Jacksonville housing market – including St. Johns, Duval, Clay and Nassau counties – shows that the region saw 1,973 starts in 1Q19, only a 1% increase over 1Q18, but a 20% increase over 1Q17. Finished Vacant Inventory, which is a measure of completed homes with no observed signs of occupancy, is up 25% YOY. Jacksonville’s annualized start rate was 8,386, a 6% increase over 1Q18, and a 20% increase over the 7,015 starts in 1Q17.
The higher number of finished homes could be contributing to the anemic starts rate. Additionally, second quarter starts tend to be more robust, and have averaged 7% higher than first quarter starts over the past 6 years. There were 1,939 closings in 1Q19 – up 7% over 1Q18. This is welcome news as increased closings help to keep our finished vacant inventory in check. St. Johns had the biggest increase, with a 13% YOY increase, while Duval was up 10% YOY; Clay County was down 14% YOY while Nassau was down 2%.
There were 8,144 closings over the past 4 quarters. This is an 11% YOY increase over the 7,340 closings we saw in 1Q18, and a 21% increase over the 6,731 closings we saw in 1Q17. St. Johns took the lead with 3,853 closings – Up 24% YOY, while Duval was up 6% YOY. Nassau was down 3% YOY while Clay was down 23% YOY.
“Despite declining affordability and an increase in finished inventory, overall housing conditions are generally positive,” said Toby Hoff, Regional Director of Metrostudy’s Jacksonville market. “Moving forward I expect growth will be more moderate than what we saw in ’17 & ’18, with only single digit gains. The December 2018 report by Florida Realtors revealed that lack of supply in this tight housing market had driven prices back up to the highs of the housing bubble. While this furthers our concerns on affordability there are no signs of a bubble. Lack of speculation and tighter mortgage underwriting means that the default potential rate remains low. The upside of price appreciation is that Florida is close to recovering all of the home equity wealth lost in the housing market collapse.”
When comparing March 2019 to March 2018 we see that new listings in the Jacksonville area are up 0.8% YOY. Pending Sales are up 2.2% YOY. Closed Sales are down 6.6% YOY. The Median Sales Price is up 2.2% ($230K). Days on Market is down YOY (71 vs 72) but is actually up to 73 when we look at year to date numbers. Months of Supply remains steady at 3.6. The number of Inventory Homes for Sale is up 3.7% YOY. Affordability continues to decline.
When compared to some of the faster growing MSA’s in the state Jacksonville’s economic indicators look only moderate. But this shouldn’t take away from the fact that economic outlook is still very positive. Cushman & Wakefield’s 2018 Florida Population Report ranked Jacksonville as No. 6 out of the top 9 MSA’s in the state. And according to Moody’s Analytics “The economy in Jacksonville is the healthiest in Florida.” Unemployment is at the lowest level since 1990, and according to CBRE, employment growth makes Jacksonville one of the top markets in the Southeast. In addition, a skilled workforce, infrastructure, and increased tourism will help the area weather slower economic conditions as we head into 2020.
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