Homebuilders and local government needs to change if they want to make a dent in Jacksonville’s housing shortage, said John Hunt founder and president of MarketNsight.
Hunt spoke to the Northeast Florida Builders Association before its trade show Feb. 6.
MarketNsight is a Georgia company that provides housing data, research and analysis for homebuilders and others.
Hunt said last year, Jacksonville had a housing deficit of more than 12,000 homes.
He said zoning laws reflect the building needs of the 1980s and that today’s buyers aren’t looking for 2,000-plus-square-foot homes on 60-foot lots with large yards.
More points raised by Hunt:
• Average buyers don’t want the upkeep and can’t afford homes priced at more than $350,000.
• The demand for large homes and the resulting zoning laws were written for baby boomers when they were young and starting families. Today, that generation is empty nesters wanting a new life experience in a smaller home. But in many ways, zoning laws still reflect the economics of 40 years ago.
• When looking for a starter home, today’s millennials and Generation X buyers also want the smaller homes now sought by boomers.
Hunt presented Jacksonville-specific data and explained why builders are constructing the wrong kinds of houses.
“It’s not a 4,000-square-foot house. We don’t need that. We don’t need a 3,000-square-foot-house. These people might want a 1,300-square-foot house,” Hunt said.
“By the way, what’s the price per square foot at 1,000 square feet and $350,000? $350 a square foot,” he said.
Hunt said people looking for homes often have to buy new construction because of the low inventory of resale homes. January’s inventory numbers in the market were at 3.6 months, according to Northeast Florida Association of Realtors data. That is a bit over half what it should be, Hunt said.
The last time the Jacksonville market had a six-month supply of housing inventory was in 2012.
The lack of inventory comes at a time when Hunt said home prices are near an all-time high in Northeast Florida.
The median price of a single-family home was $399,995 in December, according to the Northeast Florida Association of Realtors.
Since 2019, the average value of a home in this market has increased by 73%.
While that profit margin looks like a reason to put a home on the market, there is one caveat: mortgage rates.
The average rate for a 30-year fixed-rate mortgage is 6.89%, according to FreddieMac on Feb. 6.
Many homeowners have mortgages with interest rates less than 4%. They can sell at a profit, but that profit will most likely be spent on the next home.
Hunt said markets began to slow when interest rates reached 5.25%.
“That is when buyers said, ‘No more.’”
Hunt said that in April 1972, the interest rate was 7.29% and rising. A buyer would have had to wait until August 1992 to see rates go below 8%. During that 20 years, the would-be buyer would have been renting all the while the value of real estate tripled.
Hunt said laws need to change to allow smaller homes on smaller lots. Builders need to find ways to build homes that sell for between $300,000 and $350,000 amid rising construction and labor costs.
He said that last year, only five of the area’s top 15 high school districts had homes that sold with an average price under $350,000. In 2021, that price could be found in 12 districts.