Our local real estate market has unequivocally benefitted from the sanguine economic backdrop that has permeated life in 2017. The jobs market in Alachua County has been robust with low unemployment and broad-based growth, which almost always augurs a swelling population. The S&P 500 has ascended 18% year-to-date and 401Ks and IRAs across the United States have reached record high levels. Even the crypto-currency mensas among us have extolled bitcoin as it soared from $1000 to over $15,000 this annum (beware the tulips of the 17th century Dutch Republic). One can clearly make the case that there is an abundance of favorable circumstances affecting our local and national economies.
In 2017, annual median and mean housing prices in Alachua County are on pace to increase by approximately 5-7%. Peak housing values are generally attained in the second quarter and this year was no exception. The 2017 Q2 median, sales price pinnacle was $220,000 while the zenith for mean value was $258,000. Both metrics have the inauspicious honor of eclipsing the previous highs hit back in the 2006-2007 housing boom. The supply of homes for sale has been consistently around 3.5-3.9 months (a healthy and balanced market is thought to have 5-6 months of inventory). This paucity of supply may help explain why the number of annual home sales are on pace to rise by a modest 2-3% versus 2016. Many local Realtors have expressed the frustration-lined belief that if we had more good quality inventory we could easily sell more homes in order to meet the present demand. This year’s increase in values has also been fueled by strength in the sale of homes priced from $400,000 to well over $1,000,000. The irony is that 90% of annual home sales in Alachua County are for less than $400,000. Local appraiser, Edward Bell, attributes much of this year’s appreciation to highly elevated values in the price of recently constructed, luxury homes. “We are routinely seeing houses in newer communities selling for $250- $310/sf. We didn’t even see that during the 2006-2007 peak.”
Residential Home Sales 2017 vs 2016 (Jan 1-Nov 29 each year)
PRICE 2017 Sales 2016 Sales % Change
$0 – $100,000 313 403 -22%
$100,001 – $200,000 1093 1095 -0%
$200,001 – $300,000 830 738 +12%
$300,001 – $400,000 316 301 +5%
$400,001 – $500,000 134 110 +22%
$500,001- $600,000 73 63 +16%
$600,001 – $700,000 34 32 +6%
$700,001 – $1,000,000 43 34 +26%
$1,000,001 + 17 9 +89%
TOTAL HOME SALES 2853 2787 +2.4%
The precarious portion of our present housing equation may be whether household incomes can escalate at a pace to commensurate with rising housing costs. It appears as though well-maintained, reasonably priced homes in highly desirable areas under $250,000 have become much more scarce. As the costs of land acquisition, impact fees, tightening subcontractor labor pools and environmental regulations mount, one must ask; will the consumer continue to be able to bear the financial burden of rising home prices? Only time will tell. A few conclusions that may be more certain are that as long as the present economic and housing conditions persist, sellers should continue to have increasing success in this low supply, high demand environment and buyers should continue to expect competition and frequent multi-offer scenarios when pursuing desirable, well maintained properties.
2017 condo sales are on pace to be almost identical to last year with 774 units sold vs 772 in 2016. Median and mean prices rose approximately 7-8% annually. Inventory remained miniscule at approximately 2.2 months worth of supply. Approximately 60% of buyers paid cash.
There are a plethora of positives presently affecting the Alachua County real estate market. Job growth is excellent, interest rates have remained low, lenders have been relaxing their standards and credit has been reasonably accessible. This author is not prescient enough to portend if the bullish trend in our local real estate market will continue, but as Warren Buffet once said, “Be fearful when others are greedy and greedy when others are fearful.” Looking forward, if you are a seller then the market is working in your favor in almost all locations and sectors, but your optimum timeline for the best marketing starts now.
The data presented was accumulated from the GACAR MLS, FloridaRealtors.org, CoStar and the US Department of Labor through 11/29/17. Some of these statements are forward-looking and actual results may differ materially.
By Perry G. McDonald, Senior Vice President
Bosshardt Realty Services, LLC (352) 262-2871