Jacksonville, Florida, is often overshadowed by more populous and popular Florida destinations such as Miami, Tampa, or Orlando, but Jacksonville's diverse economy and geography make it a top spot for real estate investors. This article will take a closer look at the local Jacksonville market while diving deep into several key metrics and neighborhoods to help you be a more informed investor in this area.
What makes Jacksonville special?
At 840 square miles, Jacksonville is the largest city by landmass in the continental United States. Its location, situated on the Atlantic coast, St. Johns River, and just roughly an hour from the Georgia border, makes the city a major economic center for the state of Florida. The city is home to the National Football League (NFL) team the Jacksonville Jaguars and has 22 miles of beaches, giving its residents a mixture of urban city and beach life. The greater area of Jacksonville is spread across seven counties, including the popular beachside towns of Jacksonville Beach, Neptune Beach, and Atlantic Beach. Jacksonville, which has just over 1.2 million residents, is emerging as one of Florida's top new tourist destinations and has become a headquarters hotspot for fortune 500 companies, making it an appealing place to own and rent real estate.
State of the market
Despite Jacksonville being a large metropolitan city, it's not one that typically comes to mind when thinking of top destinations to work or live. However, this city is quickly making its way to the top and is one of the highest-performing economies in the entire nation. The city's super-low unemployment rate, at a time when the nation is in crisis, goes to show the strength of the job market in the area. The city, like many others across the United States over the past year, is undergoing several changes. Below are a few of the notable trends for real estate investors for the area in 2021.
1. Single-family homes lead the way
There seems to be a shift in preference from rental real estate to owning on a national scale. Record low mortgage rates are driving more homebuyers to the market, but Jacksonville historically has maintained a higher number of owners than renters long before this national trend, making this an ideal city to invest as a fix-and-flipper or ground-up developer. The city's price-to-rent ratio is just over 15, meaning it's just as affordable for residents to buy than to rent -- a main reason homeownership takes the lead when it comes to housing options.
Like many other cities across the country, semi-rural and rural housing demand is up, but suburban housing still takes the lead for the greatest number of residents. Median home prices are well below national average and, despite a low supply, have recently decreased, meaning homebuyers can afford more in a time when housing affordability is a major concern.
2. Rental real estate is strong, but volatile
Rental rates have steadily increased over the past five years; however, rental vacancies have had a volatile run. In 2017, Jacksonville's rental vacancies skyrocketed to over double the national average, returning to more normalized levels by early February 2018, but historically remain higher than the national average. This means rental real estate investors need to invest in Jacksonville carefully, having a focused investment area and strategy. While Jacksonville's unemployment rate is strong, which should lead to less housing vacancy or defaults, when rental moratoriums expire, the city could see another spike in rental vacancy rates.
3. Housing prices will likely rise
Throughout much of the country, real estate values are rising rapidly as the country faces extremely low supply and record high demand. Jacksonville, while slightly higher than the national average supply of 1.7 months, is still well below the healthy range. This, coupled with the strong job market and inward migration to Florida from a number of other states, indicates there's a good chance the city will see home prices continue to rise over the next year.
Jacksonville housing demand indicators
Charts courtesy of Housing Tides, an EnergyLogic company.
Here's a closer look at housing and economic indicators that give further insights into the notable trends for the greater Jacksonville area.
One of Jacksonville's strongest indicators right now is its unemployment rate, which is hovering around 4.4%, just under 2% lower than the national average. At a time when the country is seeing unemployment levels climb and slowly recover, having a healthy unemployment range speaks volumes for the job market in the area. Historically, Jacksonville has managed to match or outpace the national average unemployment rate, undoubtedly supported by its diverse economic infrastructure.