Despite nearly every economic indicator rolling in the right direction, the real estate market across the country is simply not exploding as expected, according to the National Association of Realtors.
The trade group said in a release shortly before Christmas that the continued shortage of housing supply is holding back the industry. And local experts say the situation in St. Johns County is pretty much the same.
“The trifecta of faster economic expansion, robust hiring and low mortgage rates should be generating a surge in optimism and home sales as 2017 winds down,” said NAR Chief Economist Lawrence Yun in a release. “Sadly, this is not the case. While overall demand remains high, it is not translating to meaningful sales gains.
“Until we start seeing a steady increase in new and existing inventory, sales will fail to deliver on their full potential and many would-be first-time buyers will be forced to continue renting.”
Victor Raymos, association executive/CEO of the St. Augustine and St. Johns County Board of Realtors, said low inventory is hurting sales here.
“Part of that is logical because if you’ve got a home to sell, it’s a great time to sell, but then you’ve got to turn around and buy something,” he said. “The great deal on selling your house is kind of impacted by the fact that you have to buy a house in the upswing of the marketplace.”
While Raymos is certainly not complaining about the current state of the real estate market, he’s simply agreeing with the conclusion of Yun.
According to the Northeast Florida Association of Realtors, which doesn’t incorporate every transaction in St. Johns County, there was just 4.3 months of housing supply available in the county in November. December numbers are not out yet.
Real estate is still strong as St. Johns County remains a desirable landing spot for relocation buyers. According to Metro Market Trends, sales for single-family houses in the county were up just slightly from June to November 2017 compared to the same period in 2016.
At the same time, local unemployment has reached near record lows — and was the lowest in the state in November — while incomes have risen and mortgage rates remain low.
It seems like the perfect combination for a hot market, but there just hasn’t been enough to sell.
“The inventory is still one of the stumbling blocks to a really robust market because the marketplace right now is robust,” Raymos said. “Still the stumbling block is getting enough inventory to satisfy the demands or the needs.
“If it weren’t for the builders doing what they’re doing, our inventory problems would be much worse.”
Many builders and developers in the area have reported brisk activity among buyers even in what is normally a slower time of year.
Part of that is because of their willingness to offer spec houses for quick sales. It’s been popular with buyers, some builders said.
“Two or three years ago, you’d go out to a builders’ site and they may have one model show home but not a lot of spec homes built,” Raymos said. “Now you go out and these new subdivisions that are going up, they’ll build five or six or seven, eight spec homes that are available and ready to go.”
Chris Shee, managing partner of MasterCraft Builder Group, said his company had six finished houses at the beginning of December and sold four of them.
“The inventory of resales is so low, we want to be able to compete with that market,” Shee said. “A lot of times people don’t have the time to build a home and they want something sooner, so we want to meet the needs of the buyers.”
A strong finish to the year is a good sign for the new construction industry as sales usually do well in the spring and summer. But Shee said September, even with the hurricane, was a great month for MasterCraft.
Finding similar results was Jason Sessions at Mattamy’s RiverTown development in northwest St. Johns County. Sessions said home sales were brisk right through the holidays and that he is optimistic about 2018 based on demand in the housing market.
“At any given time, we have approximately 10 percent of our build for the year in specs in the market,” Sessions said. “At RiverTown, we have anywhere from 20 to 30 specs on the ground at any given time in some phase of construction. That really works well for our relocation buyers that need to sell their home before they purchase a new home.
“Resales are selling faster, so people want to have the ability to move right into something else. And we have that availability now.”