It’s been a weird year for home prices.
In many of the First Coast’s more affordable suburbs, prices have had to clamber down from the dizzying heights they enjoyed during the pandemic, when a combination of low supply and high demand whipped the housing market into a frenzy, recalling images of manic potential homebuyers brandishing fistfuls of cash at delighted sellers.
Then the Federal Reserve increased the interest rate, and the First Coast’s market began to contract slightly and settle.
But interest rates tend to have less of an effect on luxury buyers, as they frequently purchase a home in cash.
“If you can afford a $10 million home, you can probably afford to pay cash for it,” Kevin Best, a luxury real estate brokerage, told our sister publication the San Antonio Business Journal. “Anything I’ve sold over $3 million in the last five years has been all-cash deals. Not a one of them financed.”
That’s not to say that the cooling market has had zero effect on the luxury home market. Some of the First Coast’s most expensive homes listed for sale have begun to go to auction though.
To see how valuations have changed over the last year, the Business Journals looked at home sales across the metro using data from Zillow (NASDAQ: ZG), compiled a list of the top ZIP codes for median home prices above $250,000, and calculated the minimum incomes needed to purchase a home at those prices assuming a 10% down payment, an approximately 7.4% interest rate and a 25% income-to-debt ratio. This does not take into account the need for PMI, increasingly expensive home owner’s insurance in Florida or property taxes.
A full breakdown of the methodology for how the data was calculated can be found at the bottom of this story.
The Business Journals put together a list of the income needed to live in some of First Coast’s most desirable ZIP codes.
Nationally, tight supply continues to weigh heavily on the housing market’s trajectory.
According to Zillow , total active inventory in June was down 10.4% from a year prior and 44.9% below June 2019 levels. That’s especially significant because the summer months are historically peak buying and selling months, underscoring the abnormal state of the current housing market.
It’s possible people’s attitudes or expectations about home prices have also played into an owner’s willingness to list their home, said Jeff Tucker, a senior economist at Zillow. When the market began to cool last summer and fall, some owners may have perceived it as a bad time to put their homes on the market, Tucker said — especially if they paid at or near the top of the market during the recent run-up in home prices.
“Homeowners stopped selling, to a surprising degree,” Tucker said. “That flow of new listings has been gradually starving the market of that new supply.”
Most housing economists agree that mortgage-rate movement is the key to unlocking not only more buyer demand, but also potentially new supply, as that could motivate existing owners to list their homes if they’ve been waiting to buy a bigger home or move.
Sign up here for the Business Journal’s free morning and afternoon daily newsletters to receive the latest business news impacting the First Coast, and follow us on LinkedIn, Facebook, X (formerly known as Twitter) and Instagram.
© 2023 American City Business Journals. All rights reserved. Use of and/or registration on any portion of this site constitutes acceptance of our User Agreement (updated January 24, 2023) and Privacy Policy (updated June 27, 2023). The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of American CityBusiness Journals.
Here's how much you need to make to live in First Coast's wealthiest … – The Business Journals
Leave a comment