U.S. real estate prices jumped 7.1 percent in May as compared to a year ago – the biggest increase in four years.
The price increase in Nassau County was likely higher. “I think it was more here,” says John Holbrook, an agent with Berkshire Hathaway Chaplin Williams Realty who reports local statistics to financial firms. “The construction costs are probably up 10 percent on their own.”
A strong demand for homes – especially on Amelia Island – along with a limited supply have propped up prices. “It just seems that people keep coming,” says Tisha Dadd, broker-owner of Island Real Estate of Amelia. “They keep discovering the island (and the area).”
In Yulee, a spate of new homes is being absorbed by an endless demand. A game changer exists in Yulee, however. It is a neighborhood known as Wildlight.
“It’s a great location,” Dadd says about Wildlight, which is “its own little entity.” The Rayonier Inc. development is closer to Jacksonville for people who work there and live here. New homes are already selling in Wildlight, which also has a state-of-the-art elementary school open and operating.
Holbrook points out that prices can vary drastically from one place to another, and from one price point to another. Lower-end homes have realized a larger percentage increase in price than higher-end homes. It’s a matter of small numbers versus large numbers.
The median price of an existing home sold in May in the U.S. was $264,800. The median is not the average, but the middle of all the price points.
And there are fewer homes for sale here and across the country. This inevitably pushes up prices. The supply of homes for sale has been dropping on an annual basis for the past 36 months, according to the National Association of Realtors.
Some metropolitan areas continue to lead the price gains, like Seattle, Denver and San Francisco. They also have the leanest supply of homes for sale.
Of course, the rise in interest rates
has caused urgency for some buyers, but ruled out others. Homeowners who have locked in mortgage rates below 4 percent may not want to roll out into a higher-rate contract. So they stay put.
Mortgage rates are now 1 percentage point higher than at the lowest point several years ago. Many believe that interest rates will trend higher from here, which could chill the real estate market for a while.
Younger, first-time homebuyers have been caught between a rock of student-loan debt and a hard place of exorbitant rents, preventing them from accumulating a down payment. Therefore, they are delayed in buying their first home.
In many areas, property prices have recovered from the severe downturn and are now at or above the all-time high prices of 2007. The highly appreciated prices can also complicate purchases, for any buyers.
Home prices in our area have certainly eclipsed the 2007 levels. The appeal of Amelia Island continues to attract tourists as well as prospective homebuyers to Nassau County. Newcomers who cannot afford to move to the island can easily locate minutes away in Yulee.
“The island definitely has been discovered,” says Dadd. “There’s an influx of people still coming in.”
Steve Nicklas is a financial advisor and a chartered retirement planning counselor for a regional U.S. firm who lives on Amelia Island. He is also an award-winning columnist. His business columns appear in several newspapers in North Florida and South Georgia, and on his personal website at SteveNicklasMarketplace.com. He has published a book of his favorite columns from the last 20 years, All About Money. The book is available in local stores and on Amazon. He can be reached at (904) 753-0236.
This article provided by NewsEdge.