People are relocating to our area in droves; if you look at the stats the majority of these people are coming from Washington D.C. (No Surprise There), NYC, WA, California, and Chicago Illinois. There is no secret that these places were hit the hardest with Co-vid and that drove our market last year. Our area is growing and so is our population. We went from 1.35 million people to 1.55 million.
1. Supply and Demand – Our market has been through a roller coaster these past couple years. After Co-vid there was an initial lull in sales. About a month after the lockdown we took off and never looked back. Around the Holidays we hit a low point in inventory and really haven’t gone above 2 months. As of right now the inventory is sitting at 1.5 months which means if we stopped putting homes on the market today we are going to run out of homes in 1.5 months. 36% of contracts are people relocating to our area. 1 in 4 are cash offers. Over the course of this year we have seen the average sale to list price being 102%. At the time of this recording we are at 99% list to sold price.
2. Demographic – People are moving here from places that have a much higher cost of living and much higher wages. Our market will continue to be a steal comparatively to where the majority of people are relocating from. Jacksonville was rated as the #8 place to retire in Jacksonville. Florida has a stereotype of being a retirement state. The force really driving our market is Boomer, Gen X, and Millennials. Millennials are expected to enter the buying force in the next 5 years. 1.17 million of them. That is on top of retiring Boomers and Generation X that had been scared off by the last recession. Around 33 years old is the time when most people are buying their first home. The group that was 33 around during the last recession saw what happened to people who lost their shirt because of predatory lending practices. Generation X is back in it now and has the confidence in the housing market they need in order to be comfortable to move foward.
3. Remote Work – Co-Vid fueled our 20% price increase this past year. We are in a changing landscape in the post co-vid world. People don’t want to work at McDonalds anymore, 15 year olds are selling digital art for millions of dollars. The world has radically changed in these past years. Remote Work is one of those changes. Companies have found that productivity has gone up with people being allowed to work from home. They also do not have the expense they once have with a brick and mortar store. People themselves have also made the switch in their minds. My friend is a project manager in NYC. Most days he is commuting 4 hrs a day going to and from his office. He just doesnt want to do it anymore. Why when he can do the same thing at home and make his site visits when appropriate. There is also no state income tax in FL so that makes it even more attractive for people whos salaries will stay the same with remote work.
4. Interest Rates – As we have heard, interest rates are on the rise. We have experienced some historical lows in interest rates. Its amazing to me that at one point 12% was a great mortgage rate. We have had comparably great interest rates for the past several years. If you look at 2019 rates were just below 5%; throughout the majority of this year and last year rates have been sub 3%. Still recovering from the pandemic interest rates have remained on a downtrend; though now we are thinking that rates are going to start to rise as the rest of the country recovers. By the end of the year they are predicting rates to go up to 3.5%. In my opinion I beleive we have been desensitized to interest rates being so low. You dont know what you got til its gone. I believe the FOMO on great rates are going to drive another wave of buyers and sellers to get into the market.
5. Cost of Living – I have a video on the cost of living here in St. Augustine and how different it is than most places. The majority of that difference is going to be in Taxes and as well as real estate prices. If you compare a 2,500 sq ft home here comparatively to other Metros, our are is a deal all day long. You get more bang for your buck. $357,000 for that size home here in the North East Florida region. Compare that to DC, Washington and NY. On average you are going to save about 138k. There are also no state income taxes here so you take home more then you would in other places with a state income tax. Also if you choose to make FL your primary residence you could also qualify for the Homestead Exemption which will allow you to deduct up to 50k off your taxable value.