COVID sparks dramatic uptick in residential market

COVID sparks dramatic uptick in residential market

The residential real estate market in Jacksonville’s historic neighborhoods is sizzling hot, and believe it or not, much of this is due to COVID-19.

Although there is no question that the Coronavirus pandemic has negatively impacted many businesses on the First Coast, the opposite has been true of the housing market, according to many local real estate professionals.

“The entire area has seen increased demand including the historic neighborhoods,” said Jeff Chefan, CEO at Manormor Sotheby’s International Realty. “Our business has increased over 39% year-to-date from our best year ever.” 

“My office has closed on more year-to-date than in all of last year, and there are still three months left in 2020,” said Lorri Reynolds, vice president/managing broker/state instructor of the Avondale/Ortega office of Watson Realty Corp. REALTORS®. 

“The economy is very strong. I’m selling more houses than I’ve ever sold,” agreed Missy Cady-Kampmeyer, owner/broker of Cady Realty. “The buyers and sellers are solid. People are willing to work and make the transactions work. I feel like it is a very strong housing market.”

Perfect storm of events  

Contributing to the red-hot residential market may be a perfect storm of events. The Coronavirus shutdowns in March and early April caused many residents who were housebound in their homes to desire to move to a place with more space indoors and outdoors to better accommodate the needs of their isolated families. Also, historically low interest rates, which have given buyers more purchasing power, coupled with a lack of inventory have caused many realtors to enjoy multiple offers on their listings. 

Another factor is a large influx of out-of-staters, particularly from California, the Midwest and the Northeast, who have discovered Northeast Florida, with its lower number of COVID-19 cases and death rate, as a great haven to shelter in place. “One reason people want to be here is that Florida has been less restrictive in its restaurant and bar policies,” said Kimberly Smith, vice president /managing broker of San Marco/San Jose Watson Realty Corp. REALTORS®.

 In fact, more than 1,000 people a day are heading to the Sunshine State with many recognizing Duval County as the place to be. Its low-density metropolitan area with arts, entertainment, and restaurants as well as beaches, waterways, parks, and breathable greenspace, is especially attractive during the pandemic, said Chefan, adding the region also seems safer because it has not encountered a direct hit from a hurricane since Hurricane Dora in the 1960s. 

As they arrive, many out-of-staters are seeking maintenance-free condos near the ocean or river as secondary homes hoping to have an escape where they can work remotely if COVID-19 flares up again, he said. 

“Jacksonville has become even more hot for relocations,” said Heather Buckman, an owner/broker with Cowford Realty & Design. “In a time where social distancing is the practice, and we all are spending more time in our homes, Jacksonville has a lot to offer. We are the largest city in the contiguous United States, and we have a relatively low cost of living, making Jacksonville a great place to escape crowded urban settings. Also, many of us believe that the shift towards telecommuting will continue after COVID-19 fades. As people find they can work from anywhere, places like Jacksonville are even more desirable. Why stick to a crowded, expensive metropolitan area when you can move to Jacksonville with its lower cost of living, extra space, and all the amenities of a larger city?”

The Domino Effect

According to Florida Realtors magazine, the 30-year average mortgage rate dropped to 2.86% in September, down from its previous record-low Aug. 13 of 2.88%. It is now cheaper than the average adjustable-rate loan of 3.11%. And this inexpensive money coupled with a low inventory of homes has created a sellers’ market, where 18% of homes in Jacksonville are selling over list price, said Buckman. “The sellers’ market puts them at an advantage, and we are seeing a lot of multiple offer situations. If someone is looking to sell, they truly couldn’t pick a better time.”

Also good news is that the Federal Reserve plans to keep interest rates low until 2022 causing a stimulus that has affected every corner of the housing market, said Chefan. 

“What we are finding is a lot of first-time buyers who would normally be renting can now come into the market. This creates a tremendous move-up buyer market. First-time buyers are shopping now when the interest rates are low, and the price point those families can get into is a lot higher. This creates a domino effect where it continues to move up the ladder. The $200,000-$400,000 range has gone up and the $400,000-$600,000 range has gone up because that initial first-time buyer is looking for a place under $200,000, which has pushed up the values of the homes. The low interest rates enable all buyers to get into higher-priced houses. People who may have bought their homes for $150,000 are now selling them for $250,000 and taking the equity they have in that house and putting it into a new home,” he said.

As Managing Broker of Berkshire Hathaway Florida Network Realty, Josh Cohen concurred. “In the current market climate, all price ranges are in high demand. We really haven’t slowed down in any sector. The luxury space is busy down to the entry-level market. Many renters are transitioning into home ownership. With rates as low as they are, there really has never been a better time to enter the market. People are able to move up as well as they now qualify for more.”

But a healthy real estate market is nothing new to the First Coast because inventory has been low for some time, said Jill Mero, realtor, broker/owner of Mero Realty. “The real estate market in Northeast Florida was booming before COVID-19 and has barely been affected by the pandemic as buyers are still buying in a market with less inventory,” Mero said. “What has changed the most is the way we conduct our business. We are seeing more virtual showings and virtual open houses. We are careful to make sure we follow the CDC guidelines of social distancing, mask wearing, and sanitizing when showing property to buyers or when buyers enter our listings. Real estate technology has already progressed to the point where almost all of our transactions are handled electronically so we were kind of ahead of the game in that respect,” she said.

Business adaptations

When the Coronavirus shutdown caused many businesses to close or drastically curtail their services, realtors were deemed “essential” and were able to continue working, while adapting their protocols and standards of practice to the new reality. “The realtor community has done a wonderful job of making sure the public is safe,” said Ted Miller, president and broker of the Fred Miller Group. “We wear masks, socially distance, and have hand sanitizer at all showings. We also ensure that no one involved is ill within the household. We wipe down surfaces afterwards, and encourage only decision makers to attend the showings,” he said, noting all clients are vetted to make sure only qualified buyers with an immediate need take in-person tours.

“The real estate industry has not missed a beat,” agreed Cohen. “In fact, we have grown and evolved during the pandemic. We have become more familiar with new technology like virtual meeting platforms that enable new and efficient ways to communicate and service our clients.”

The demand for “comprehensive digital marketing,” so buyers can familiarize themselves with houses without setting foot on the property has been accelerated by the pandemic, said Miller. “Buying a home is still the largest single investment most people make, and to buy it off a video walk-thru, virtual tour and floor plans is pretty remarkable. Buyers can do it nowadays and know what they are getting. 

“This is a big shift in buying behavior,” Miller continued. “Buyers know the homes very well before they go into them. We are using every piece of technology that’s available to help buyers and sellers. It’s expedited the process, especially for the buying public because they are looking at things they already know they are interested in,” he said, adding that since the pandemic began, he has sold more homes sight unseen than in his previous 22 years combined in the industry.  

And the need for realtors to hold open houses has also waned due to the pandemic.

“There are fewer open houses available in the market due to COVID-19,” Miller said, adding that because new listings frequently encounter 10 to 20 showings per day and attract multiple offers on the first weekend, there is no need to hold an open house. “We’re selling things before we can get to it,” he said. “The biggest reason open houses have dwindled is the lack of inventory. Things are selling so fast. People don’t seem to mind because they are a little more cautious about where they go and the environments they are entering into.” 

Lure of historic communities 

And while all homes are selling fast all over Northeast Florida, Jacksonville’s historic neighborhoods are particularly attractive to buyers due to their proximity to downtown and the St. Johns River. Buyers love the small shops dotting the commercial areas, the physical beauty of the landscape, as well as streets that are bike friendly and walkable, and the sense of community that pervades the area, said Miller. 

“People like being able to see or wave at your neighbor without having to sit in their living room. You know you are part of a community and not closed off because you have to keep your distance,” he said.

Other than St. Johns County, where parents might seek a “better” school district, the historic neighborhoods are the most requested area of Jacksonville due to their “walk score,” said Cady-Kampmeyer. “People want parks, biking, and outdoor activities. They want outdoor bars and wine tastings with bistros and rooftops. Hands down, the walk-score ability of the historic district is the No. 1 calling card in the community. People also want the tight community feel, the little boutiques, the little shops. Essentially, they want Mayberry. They want to know their neighbors,” she said.

Another reason that buyers are flocking to the historic neighborhoods during the time of COVID-19, is that people are not as interested in communal amenities such as community swimming pools, clubhouses, or waterslides, said Reynolds. With Coronavirus lurking they would rather have a more spacious yard with a pool. “Neighborhoods like Ortega, Avondale and Riverside are true neighborhoods,” she said. “They don’t have HOAs.”

Chefan agreed. “What we are finding is that people are looking to be more spread out. They are looking for that lifestyle with more space, more outdoor living area. They are looking for more space within their property and a further proximity to their neighbors. They want a larger footprint to maneuver, one that is near parks or greenspace,” he said. Homes in the historic neighborhoods are highly desirable, especially those that front community treasures such as Whatley Park in San Marco or Boone Park in Avondale. Greenspace is a big boon for the neighborhood, he said.

And that also accounts for an uptick of sales of riverfront homes along the St. Johns, which had previously slowed down after Hurricanes Matthew and Irma. “We see more sales on the riverfront and a lot of it has to do with lifestyle and people’s ability to spend time in a boat. They want something they can add to their day-to-day lives without being cooped up indoors and isolated,” he said. 

“Homes that are the most popular right now have extra outdoor space or – better yet – a pool! We are all spending more time at home, and that will not change at least for the foreseeable future. For that reason, homes that have an extra-large lot, or some kind of outdoor feature are extra popular!” explained Buckman. 

In fact, multiple offers are coming in on homes at all price points, even at the higher end, but the sweet spot is the $250,000 price range and below, with some homes having as many as 20 showings per day. “As a listing agent, you will not be growing old with that listing,” said Reynolds, adding she attributes the buying surge to a loss of confidence in the stock market by some investors. “They are turning their wealth into real estate because real estate is more tangible,” she said.

Broker and owner, Sally Suslak of Traditions Realty said $350,000 is the average price of homes in the historic neighborhoods, because there are small and large homes within the community. “Homes below this price point are ‘flying off the shelf’ as long as they are priced right,” she said. “Every buyer has a different idea of how much space they want and need. Some people are nesters and others love the wide-open spaces.” 

“We’re selling everything $600,000 and under very, very fast, and the mansions are going, too,” added Cady-Kampmeyer.

In fact, real estate may be what spearheads the local economy back to recovery. “When the world experiences a life change, real estate is always involved. Realtors were considered essential in the beginning when the Coronavirus was announced in March, but more than just being essential, I believe real estate is going to lead the local economy back into recovery because every life change a person has can mean a change of location. Everyone needs a place to live,” said Reynolds.

Re-examining life due to COVID-19

One thing is for certain, the Coronavirus and the subsequent shutdown caused many residents to reexamine their lives and lifestyles. For some, there is a desire to move closer to children and grandchildren. For others, being cooped up with a spouse has become grounds for marital discord. Others may see a need to downsize after being furloughed, losing a job, or deciding to retire early. 

Regardless of the reason, COVID-19 has provided the opportunity for many North Florida residents to become “intimate” with their living spaces, and many discovered their houses did not work for them anymore. Clients now are seeking “flex” space for more privacy, so they can install a home office or a quiet location where their children can attend school virtually. 

“A lot of people have been working from home since March and still don’t have a date on which to return back to their office permanently if at all,” said Smith. “This is forcing people to look for more flexible living space.”

“Space is at a premium,” agreed Buckman. “With many of our day-to-day functions moving into our homes, the need for space has never been greater. Flex spaces, whether for a home office or homeschooling area, are no longer a luxury but a necessity. Homes are doing triple duty – acting as schools, workplaces, and family headquarters. Having more square footage and larger outdoor areas helps to make people feel like they can fit it all in without feeling cramped.”

“There’s no question homes with a true home office or guest suite are in high demand,” said Cohen. “Many people are still working from home and these newly desired features offer a better work-at-home experience.”

Also, during the shutdown, when residents found they had nothing to do by stare at the four walls, many also decided to renovate their homes in an attempt to make them more liveable. “Once things began to loosen up, many decided to put their homes on the market because they looked great,” Reynolds said. “They’ve been saying, ‘the house looks good, interest rates are low, but the house doesn’t really suit us anymore, let’s sell it,’” she said.

Cady-Kampmeyer agreed. “Nobody is on the fence anymore. Because the seller marker is so strong, if people were thinking about it before, they are selling and for more than what they expected. Then they are buying a house for less of a payment because of the interest rates,” she said.

A strong finish to 2020

In years past, as the holidays near, the market often slows down after Halloween, but because this is 2020 that may not be the case. “We may have fewer buyers looking, but they will be more serious,” Reynolds said. “No one thinks that COVID-19 is going away anytime soon. If you are going to have to stay in a house and spend more time in it, you might as well make the best of it.”

Suslak concurred. “This market will only stay as strong as it is now as long as the interest rates are low, and the  COVID-19 virus is still a serious threat to their well-being,” she said. “Who knows how long that will be?”

By Marcia Hodgson
Resident Community News

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