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Sellers revel in higher prices as buyers compete over scarce inventory

April 13th, 2021 · Leave a Comment

Buyers on the First Coast continued to face fierce competition due to a record-low inventory of single-family residential housing and condominiums, which forced many into bidding wars in March.

Reasons attributing to the exceptionally busy and competitive buyer market were normal increases sales activity in the spring, a relaxation of COVID-19 policies, rising construction costs and a gradual increase in prices and mortgage rates.

“The strong sellers’ market continues into the spring home buying season, with inventory dropping again in March to a 1.2-month supply,” said Northeast Florida Association of REALTORS® President Missi Howell. “Buyers, competing with primary, second home, and investment buyers are finding walls at every turn, with almost 100% of list price being paid and just under 29% of buyers paying more than the list price.”

Inventory in Northeast Florida dipped slightly from the February 2021 number of 3,931 units to 3,782 units in March, further encouraging sellers. The 1.2-month supply represents a 60.1% drop in inventory from March of last year.

Meanwhile, prices in Northeast Florida are continuing to rise with the median sales price of $274,000 for the region, an increase of 12.7% from last year, and nearly $10,000 more than the February 2021 median price of $265,000. Northeast Florida’s average sales price also climbed. At $344,643, it represents a 20.4% jump from a year ago, and a marked increase from $323,467 in February 2021. Nearly 30% of closed sales sold for more than the most recent list price, showing a 102.1% rise since a year ago. Meanwhile, the number of days that residences spent on the market fell 30% from March 2020 to 49 days.

Rising home prices, mortgage rates that are gradually inching higher joined with sparce inventory to contribute to a drop in affordable housing in the region. “The affordability of Northeast Florida housing, both for purchasing and renting, is being further pressured as evidenced by the decreased housing affordability index,” said Howell. The March index of 127 showed an 8% reduction from its 138 level in 2020 and a five-point slide from February 2021, where it registered at 132.

The price range with the strongest residential sales among single-family homes, condos, and townhomes continued to be units in the $1 million range and above, with a 78.8% increase over last year. Condos and townhouses showed the strongest sales, up $18.1% over March 2020.

However, pending sales fell 12.1% among lowest-priced homes in the range of $149,000 and below. There was also an inappreciable dip of .5% in the $150,000 to $199,999 range.

As homebuilders work to increase supply, the soaring cost of building materials – especially lumber – and a backlogged supply chain due to COVID-19 continue to limit the construction of new homes and increase their cost.  New methods of home building, including 3-D printed homes, might find a way to reduce costs and speed construction in the future, but, realistically, will not make a measurable impact in the market for several years, according to the Northeast Florida Association of Realtors.

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