JACKSONVILLE, Fla. – A local real estate agent says new home prices are dropping and it’s because of the ripple effect from COVID-19 and supply chain issues.
During the pandemic, home prices increased, mortgage rates were around 3% and more homes were built. But a backlog of construction supplies slowed down completion and move-in dates.
Jonathan Daugherty, a realtor in St. Johns County, said housing fallout is leading to better deals for some future homeowners. Future homeowners who qualified for a mortgage at 3% may not qualify for a 6% rate, but their home is already built, so after the fallout from the deal, builders are trying to sell homes for thousands of dollars cheaper.
Daugherty, who has been a local real estate agent since 2009, recently talked with News4JAX about how he’s seeing a shift in real estate.
“Now interest rates have gone up to 7%,” Daugherty said. “So now that 12-16 months later, after they’ve done the contract, the houses are now being finished and the lenders are coming back and saying, ‘Well, that 3% is now 6 ½-7%.’ And now the payment is $1,500-2,000 more than what they originally thought it was.”
The future homeowner can no longer afford the home, and in some cases, the buyer is losing their down payment, too.
“Through no fault of the builder and no fault of the buyer, the transaction can’t happen,” Daugherty said.
But the house still needs to be sold. The banks want the money they gave builders in advance to construct the home. The home goes back on the market in hopes of being sold at a lower price to a new buyer.
“An incredible opportunity for buyers,” Daugherty said.
Daugherty said a home that was originally $500,000 is now selling near $475,000, creating an opportunity to for a new homeowner — if they can afford the higher interest rates.