Even as the Pensacola real estate market cools off a little, buyers should still expect to pay more for an average home than ever before.
During the past year of a red-hot market, the median price for a single-family home has crept up to an all-time high of $290,000, according to the most recent data from the Pensacola Association of Realtors.
The median sale price two years ago was about $220,000.
Realtors say that number represents a hardship especially for first-time homebuyers who are usually trying to break into the market with a home at the lower end of the market up to the midrange, which is harder to achieve now as that target has risen by tens of thousands of dollars.
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They also say the median price point tends to be the most saturated with buyers, including first-time homebuyers, older people downsizing and young couples starting families trying to move into a bigger home.
"It's very hard and the first-time homebuyers several years ago could get into the market sometimes under $100,000," said Kathy Batterton, an agent with Levin Rinke Realty. "Now you have to have close to $200,000 to even enter the market if you want something livable. It's really gotten out of control; the prices are ridiculous and I don't know why it's getting that way beyond the fact there's no inventory out there."
Real estate agents have been inundated with business during the past year as newly remote out-of-town buyers and locals wanting to take advantage of historically low interest rates started house hunting. Many existing homeowners jumped in, too, hoping to sell for a profit.
Batterton said she had one client who bought a new construction home in Escambia County in February 2021 for $257,000 and he just sold it in August for $316,000. That same floor plan in the same neighborhood is now selling for $336,000, she said.
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The issue late last year and through this spring was compounded by the fact that newly built homes were delayed by supply chain issues and labor shortages, so many of those were not included in real estate inventory and kept some would-be buyers in rentals or lower priced homes.
October data from the Pensacola Association of Realtors shows that the competition should ease a little as inventory slowly climbs higher, something Batterton thinks can be, in part, attributed to those new homebuilders catching back up on their schedules and listing their homes.
It's widely known in the area's real estate community that for a healthy market, the Pensacola region — which includes Escambia and Santa Rosa counties — needs a stock of about 2,500 homes. In October 2020, that number had dipped down to 1,907 homes but as of October 2021, it was back up to 2,389.
So while the fierce competition of last spring might be cooling, buyers will still need to pay more to get into a home this winter.
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Realtor Misty Estes, with Keller Williams Realty, said that in the past few months, she's seen several first-time buyer clients who experienced "buyer fatigue" in the spring jump back into the house hunt hoping the frenzy is over.
Interest rates have risen from the historic lows in the 2% range last year to the 3% range, she said, but that's still an incredibly low number that has buyers wanting to capitalize on having more money in their pocket each month before rates rise back into the norm of 4% or 5%.
"In early 2020, we didn't know what was about to happen and I was writing, on average, three offers before a buyer got under contract, but now it's double that," Estes said. "Buyers have to be prepared and know the rules of the game. Sometimes it feels like drinking water from a fire hose because it seems overwhelming but we're here to try break it down."
In that midrange market, which is now between about $280,000 and $320,000, Estes said some investors wanting a relatively safe investment — as compared to the stock market — have been willing to pay higher prices that again reduce the stock for the first-time or mid-level home buyers. Usually, she said, investors would search for the lower priced homes they could flip or hold and rent for a steady income.
First-time buyers also often seek closing cost assistance from sellers or federally backed financing like FHA loans with a less than 20% down payment, offers Estes said aren't as attractive to sellers in this market, which again means those buyers could miss out.
"That kind of offer compared to somebody offering cash, cash always wins," she said. "We're in that market where if you're in the home and think this one's it, we've got to put in an offer right now, we can't go look at somewhere else and come back or it'll be gone."
The monthly report also notes that residential homes between $160,000 and $299,000 are on average on the market only 10 days, whereas in 2019, those homes were on the market anywhere from 20 to 60 days on average.
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Still, Realtors like Batterton are optimistic the next few months will see a leveling off where sellers are no longer inundated with hasty offers within hours of listing a home and buyers aren't offering cash over the listing price as an added incentive.
"I think we're already seeing a bit of a leveling, I don't think there will be a bubble but I'm already seeing a cooling off of the market," she said. "People aren't being insane, they're not throwing money at offers like they were in the spring."
Emma Kennedy can be reached at firstname.lastname@example.org or 850-480-6979.
This article originally appeared on Pensacola News Journal: Pensacola area breaks median house price record, $70k above 2019 price