Beachwood Civic Association

Real Estate Values Continue To Rise

Jun 01, 2005

The following are excerpts from a story by Jean Sealey that appeared in the May 8, 2005 edition of the Florida Times-Union. Ms. Sealey is the communications director for the Northeast Florida Builders Association.

When interest rates plummeted and then remained low, the number of people buying homes increased dramatically. And, as more people joined the ranks of homeownership, the prices of those homes began to increase as well. Today, we are seeing home prices escalate even more.

Information from the Florida Association of Realtors indicates a 17 percent increase in the median sales price of existing homes in the Jacksonville Metropolitan Statistical Area during the past year.

The very factor that contributed to an increased demand for housing units is also a major factor in the escalation of prices -- low interest rates.

"The low interest rates over a long period of time, about five years, brought about a sustained increase in the qualified buyer pool," said Ross McWilliams, senior vice president and market manager with Bank of America. "More people can afford to buy homes, and they can afford larger homes with more upgrades, which drives the prices up."


McWilliams said his company attributes its 40 percent growth in the Jacksonville market over the past year to the increased demand for housing, escalating prices and the company's underwriting fundamentals.

Given the law of supply and demand, sellers were able to ask for and receive higher prices for their homes.

Another factor responsible for rising housing costs is the increased cost of building a new home, said Greg Matovina, president of Matovina & Co., a development company and immediate past president of the Northeast Florida Builders Association.

"Although Northeast Florida is enjoying a very favorable environment for building new homes, we have seen an increase in the cost to build a new home," Matovina said. "Costs of materials go up as the demand for them increases, and in recent years, we have seen an increased demand for building materials not only for our own use but for use in developing countries."

Matovina said, too, builders are faced with dwindling supplies of land and paying a premium for the remaining acreage. Impact fees imposed by county and local governments are also adding to the costs of building new homes.

McWilliams noted that Jacksonville is becoming a destination of retirees, drawing even from those already established in South Florida.