Q4 2023 Year-End Report: St. Johns Market Rebalances as Rates Peak
By Inna Moskalyk
Jan 6, 2024
Tags:Market Reports
As we closed out 2023, the St. Johns County and Jacksonville real estate markets completed a significant transition. What began as a continuation of the post-pandemic seller's frenzy evolved into a more balanced-and ultimately healthier-market. Here's your comprehensive Q4 2023 year-end market report.
Q4 2023 Market Statistics
The fourth quarter solidified trends that had been building throughout the year:
- Inventory – 2.8-month supply in December-still technically a seller's market but significantly higher than the sub-2-month levels of early 2022
- Existing Home Sales – Down 22% year-over-year for the Jacksonville metro area
- Rental Market Shift – Apartment vacancy rate rose to 13.5%, with average rent at $1,471/month (down 3% from Q4 2022)
- Builder Activity – New construction representing an increasing share of sales, supported by aggressive incentives
The Rate Peak and Fed Pivot
October 2023 marked the peak of the interest rate cycle, with 30-year fixed mortgages approaching 8%. This represented the highest borrowing costs in over 20 years and had a profound impact on buyer activity.
However, December brought hope as the Federal Reserve signaled a potential pivot toward rate cuts in 2024. According to Freddie Mac, rates began edging down slightly by year-end, inspiring cautious optimism for 2024.
The popular advice became "marry the house, date the rate"-encouraging buyers to purchase now with plans to refinance when rates eventually decrease.
Local Highlights & Holiday Season
Despite market challenges, St. Johns County's appeal remained strong, especially during the holiday season:
- Nights of Lights – The 30th Annual celebration began November 18, 2023, with 10,000-20,000 attendees at the kickoff and over 3 million lights throughout downtown St. Augustine
- Nocatee Growth – New openings included Bronx Pizza, ChopHouse, Degree Wellness, and Mayday Ice Cream
- Future Amenities – Seabrook Park announced for April 2024 opening in Nocatee
Tourism to St. Augustine saw only a slight dip of 2.7% year-over-year but remained above pre-pandemic levels, supporting the local economy and highlighting the area's enduring appeal.
Builder Incentives at Historic Levels
New construction became increasingly attractive as builders pulled out all the stops to move inventory:
- Rate Buy-Downs – Temporary and permanent rate reductions below market rates
- Closing Cost Coverage – Substantial credits to reduce buyer out-of-pocket expenses
- Design Center Credits – Upgrades and customizations included at no additional cost
For buyers who could qualify, new construction often provided better overall value than existing homes, especially when factoring in modern energy efficiency and hurricane-resistant features.
2023 Year in Review: The Transition Year
Looking back at 2023 as a whole, several key themes emerged:
- Market Evolution – Transition from peak seller's market toward balance
- Rate Shock – Mortgage rates reached 8%-the highest in over 20 years
- Builder Response – Incentives became standard practice to maintain sales volume
- Inventory Recovery – Supply finally began normalizing after years of extreme shortage
- Price Resilience – Despite challenges, prices remained well above pre-pandemic levels
What This Meant for Buyers & Sellers
For Buyers:
The holiday season presented strategic opportunities. Less competition, motivated sellers, and builder incentives created favorable conditions for those who could navigate the rate environment. The key was focusing on total cost of ownership rather than fixating on interest rates alone.
For Sellers:
Realistic pricing and patience became essential. Those who understood the changed market and priced competitively still achieved successful sales. The days of automatic bidding wars were over, but well-prepared homes in desirable locations continued to attract buyers.
Looking Ahead to 2024
As 2023 closed, optimism was building for 2024. Key factors to watch included:
- Fed Policy – Rate cuts anticipated, potentially improving affordability
- Inventory Trends – Continued normalization expected
- Building Activity – Strong new construction pipeline in St. Johns County
- Population Growth – Jacksonville and St. Johns County expected to continue attracting new residents
Plan your 2024 home purchase with our Mortgage Calculator to see how different rate scenarios affect your payment.
Start 2024 with a Strategy
Whether you're planning to buy, sell, or invest in Northeast Florida real estate in 2024, having a clear strategy based on current market conditions is essential. Contact me today for a personalized consultation and let's make your real estate goals a reality in the new year.