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Thomas and Chelsie Richardson wanted new construction and settled on the Oceanway neighborhood.
Jax Daily Record Thursday, Apr. 20, 201712:00 PM EST

First-time homebuyers facing a tight market

Low inventory, surge in price making house hunt a challenge
by: David Cawton Staff Writer

The starter home may be harder to obtain in 2017 for some looking to join the ranks of homeownership for the first time.

According to the Northeast Florida Association of Realtors, median home prices are up 10.6 percent for the year to about $188,000. Inventory for available homes on the market continues to slide, down 21 percent as of March.

Experts say that’s leaving first-time homebuyers with fewer choices and less bang for their buck.

“It’s a dilemma,” said Lee Arsenault, president of the Northeast Florida Builders Association. He said the typical starter home used to be “somewhere between $75,000 and $175,000,” depending on location and age.

But he says $200,000 is a more realistic range in North Florida – and that’s causing many to re-evaluate their budgets.

Newly minted home owners Tyler Bounds and fiancĂ©e Kaleigh Williams began searching for their first home late last year. They quickly realized there wasn’t a lot out there, even with their $220,000 budget.

“We wanted to be near the beach, we wanted the upgraded kitchen and floors,” said Bounds, who recently joined the Jacksonville Sheriff’s Office after serving in the U.S. Army. “With our budget, it was an impossible task.”

After a four-month search and touring more than two dozen homes, the couple settled on a single-story off Hodges Boulevard near Providence High School.

“We definitely didn’t find the one we wanted, but we met in the middle,” Bounds said.

He admits their home doesn’t have all the bells and whistles, but overall, they’re satisfied. “We’ll make upgrades as we go,” he said.

Experts say making concessions is becoming more of the norm for first-time buyers - and not just in Jacksonville.

“This is really indicative of what’s going on across the state, and the nation,” said Marc Jernigan, president of NEFAR.

Jernigan said inventory for homes less than $200,000 has dwindled over the past few years for several reasons, including a dip in foreclosures, rising property values in desired neighborhoods, and increased demand as Northeast Florida grows.

Now he says that starter homes realistically go for $200,000-$250,000.

“That’s probably a higher number than what you would have seen 10 years ago, but it’s still very affordable,” he said. According to NEFAR, the median price of a house in 2008 was about $135,000.

Chelsie and Thomas Richardson took a different route when they began searching for their first home.

They faced a similar dilemma.

Should they buy an older property in a prime location, or take the upgrades offered by new construction a little further away?

“I really wanted to be at the beaches but it’s expensive.” Chelsie Richardson said.

The couple focused on new construction, figuring it would save them money in the long ru.

“We didn’t want to find out later that we needed to put a new roof on or something like that,” she said.

Searching for new construction under their $250,000 budget, the couple eventually landed on Jacksonville’s Northside, finding a two-story home in Oceanway.

Richardson said it may be a little out of the way, but it’s right for them.

“You can get a much nicer house over here for the same price as a little shack at the beach,” she said.

Arsenault said the Richardsons’ experience reveals how hard finding new construction at an affordable price can be.

“We’re seeing less and less opportunity for starter home creation,” he said.

He said the combination of impact, concurrency, and mobility fees in some up-and-coming developments prevents builders from offering homes priced less than $200,000.

“The builder ends up paying those costs, ultimately funneling them back to the homebuyers,” Arsenault said.

For example, Arsenault said a $10,000 impact fee, after mark-up, could end up being more like $15,000.

“Add that to a 30-year fixed rate mortgage and it becomes a tremendous long-term impact for the buyer,” he said.

The squeeze isn’t going away any time soon.

“What we’re seeing is it’s harder to hit under that $175,000 home price and we think that’s going to continue, until eventually it’s just not possible in some parts of Northeast Florida,” Arsenault said.

While the market is tight, it isn’t all bad for prospective homebuyers.

“The good news is there’s still a lot of money and financing available for first-time buyers to get into that first house, even if it seems like it’s out of reach,” said Jernigan at NEFAR.

Jernigan said first-time buyers should be flexible, get pre-qualified and be ready to jump on a property that fits their needs, even if that means making a few concessions.

He doesn’t see folks looking elsewhere altogether.

“North Florida is still considered a value compared to the rest of the state. The one thing we have is space, and there’s plenty of good homes for sale,” he said.

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