by Bradley Parsons
Staff Writer
The comparatively low incomes earned in Jacksonville have been identified by the mayor’s office as one of the City’s biggest problems. But observers of Jacksonville’s real estate market say those paltry paychecks are helping to keep real estate prices low.
Jacksonville’s average income lags behind those in Florida’s major markets. But even as incomes climb in markets like Miami and Orlando, affordable single-family homes in those markets is getting farther out of reach due to an explosion in residential prices.
The average home in Orlando appreciated by 30 to 40 percent from March 2004 to March 2005. In Miami, the average appreciation topped 40 percent, according to a study by the Federal Deposit Insurance Corporation. At below 20 percent, Jacksonville’s average appreciation seems tame by comparison.
The Jacksonville rate fell below the statewide average of 28.1 percent appreciation. That number was propped up by disproportionate growth of prices in South and Central Florida and along the Gulf Coast.
That means Jacksonville home buyers, despite relatively modest incomes, aren’t feeling the pricing pinch as severely. While the average home price in Florida topped $100,000 last year, according to real estate research firm HomeGain, Duval County’s average home sold for $83,473.
That puts the average home price in Jacksonville at about 2.8 times the size of the city’s average income of $30,212. Statewide, home prices were 4.4 times income levels. In markets like Miami and West Palm Beach, “home prices were more than six times income levels,” according the FDIC study.
“Gains in income have failed to keep pace with the robust price appreciation (in houses),” reads the study. “Consequently, affordability may be emerging as an issue not only for lower income households, but also for more affluent, white-collar home buyers.”
Conversely, in the Jacksonville market, lower incomes may be restraining home prices. For instance, downtown residential construction has so far largely targeted the affordable and market rate segments of the market.
The market rate construction makes sense in the context of Jacksonville’s comparatively low incomes, said Ray Rodriguez, president of the Real Estate Strategy Center of North Florida.
“The market is still there for affordable and market-rate units,” said Rodriguez. “The higher end, the luxury end of the market is where you see the impact of the low rate of income.”
High-end development downtown is relatively scarce. Only The Plaza and the under construction San Marco Place are targeting that segment of the market. And Rodriguez said those developers are likely to look outside of Jacksonville for buyers.
“If you’re going to develop at the luxury end, then don’t spend your money marketing in Jacksonville,” he said. “They’re more likely to market in the major markets in the Northeast where people have more money and might be considering buying a second home or a retirement home.”
Spread over 840 square miles, Duval County’s ample supply of real estate and booming construction industry are also helping to keep home prices low. There’s ample new product on the market.