JACKSONVILLE, Fla. – A warning from economists on what the future holds for homeowners and renters.
Real estate prices have been soaring in Florida and across the country, but industry experts say there’s going to be a reckoning.
News4JAX spoke to a Florida Atlantic University economist who explained why financial hardships could be on the horizon.
Home sales fell for the third month in a row in April, according to the National Association of Realtors, as rising mortgage rates and affordability challenges continue to push would-be home buyers out of the market.
The nationwide median price of a home is at an all-time high, a record $391,200. That’s up nearly 15% from last year.
What’s next won’t be good for everyone, according to real estate economist Ken Johnson.
“There’s going to be some repercussions, there’s going to be a reckoning. So this is occurring not only in Jacksonville but many cities around the country right now. But everybody doesn’t have the same set of circumstances or the same backdrop that Jacksonville does,” said Johnson.
Johnson said in states like Florida where there’s a severe shortage of available housing, and an influx of new people, he said the value of homes will remain high, and so will rent.
Rent in Jacksonville was 20% higher in April compared to a year ago, according to a new analysis from Redfin.
In contrast, Johnson said in other metropolitan areas which are seeing a population decrease, homeowners there could see the value of their homes decline.
″So you’re going to see prices decline, significantly in many areas like Youngstown, Ohio, Buffalo, New York where you’re getting that departure of population. So no one’s getting out of this unscathed,” Johnson said.
Johnson said the large number of out-of-state investors that purchased homes and apartment complexes in North Florida is actually a good thing for the local economy. Even though these out-of-state investors are oftentimes paying cash, and pricing families out of the market, Johnson said they are creating stability.
“I hear this a lot where, you know, the out-of-state investors, the institutional investors, Wall Street, they’re ruining the rental market, they’re ruining the housing market. And quite honestly, it’s the exact opposite. So what they’re doing is creating efficiency you want folks in, you want professional investors in your asset class,” Johnson said.
The supply of homes is starting to improve slightly according to realtors, transactions are still progressing quickly, but not as many homes are being sold sight unseen. But because interest rates are creeping up higher and higher, many families are choosing to stay in the home they live in, and not sell if they locked in at record low-interest rates last year.
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