Bought a New Construction Home in Jacksonville and Now Owe More Than It’s Worth?

Jacksonville, Florida New Construction Prices Have Fallen More Than 10% Since the Market Peak - Leaving Some Recent Buyers Underwater!

If you bought a new construction home in Northeast Florida between 2021 and 2024, you may be discovering something frustrating: your home could be worth less today than what you paid for it!

This can be especially difficult if you purchased with an FHA, VA, or other low-down-payment mortgage. If you need to relocate, divorce, transfer for work, downsize, or simply can no longer afford the home, you may find that selling it for today's market value won't produce enough money to pay off your mortgage.

We're seeing this firsthand. Many of the Jacksonville area short sales we're handling today involve homeowners who purchased new construction near the peak of the market and now need to sell for less than they owe.

Why Are So Many Recent Jacksonville Florida New Construction Buyers Underwater?

New construction prices have been plummeting since the peak of the market in Jacksonville, Florida. The peak of the market is generally regarded as the time period around late 2022 to early 2023. That was the height of pricing on all homes, including new construction. Unfortunately, not only was that the peak of the market but buyers of new construction pay a premium for the privilege of having a brand new home.

New construction sales prices are down  ~ 10% in just the past three years!

Even if your home's value has fallen only 5–10%, that can be enough to create a short-sale situation when you purchased with little money down and then need to pay the normal costs associated with selling.

While the size of the average new construction home has remained mostly unchanged, prices certainly have. Median new home sales prices have dropped 12%, and square foot adjustments at 9%. Home selling time has also more than doubled over the last three years from 28 days to 59 days:

A market shift is well underway!

This is certainly great news for buyers, especially buyers seeking to own brand new homes. Unfortunately this provides a dismal outlook for new construction home buyers that did buy during the market peak. Peak market new home buyers are now looking at identical brand new homes going up for much less than they paid, and if they are looking to sell, they are now in competition with these homes but without being able to command a premium price for their now "used" home.

Should buyers of peak year new construction need to sell now, and they used a low down payment loan product (such as VA or FHA), many are now finding themselves owing more than their homes could sell for. 

Jacksonville and Northeast Florida Areas Hit Hard by the New Construction Boom.

The new construction boom wasn’t limited to one part of Jacksonville. Between 2021 and 2024, thousands of new homes were built throughout Jacksonville and the surrounding Northeast Florida area, with especially heavy development in North and Northwest Jacksonville, the Westside, Southwest Jacksonville, Southeast Jacksonville and the Bartram area.

Communities throughout ZIP codes such as 32218, 32219, 32221, 32222 and 32234 saw significant new home development during the height of the market. New construction also expanded rapidly along the I-295, First Coast Expressway, Bartram Park and I-95/9B corridors.

The building boom extended beyond Duval County as well. Buyers flocked to new communities throughout St. Johns County, Clay County and Nassau County, including areas such as St. Johns, St. Augustine, Middleburg, Green Cove Springs, Yulee and Fernandina Beach.

For homeowners who purchased during the peak years, the problem isn't simply that the overall housing market has changed. In many newer communities, homeowners who need to sell are now competing directly with builders that may be offering lower prices, closing-cost assistance, interest-rate incentives and other buyer incentives on brand-new homes.

That can make selling a home purchased just a few years ago especially difficult.

What If You Owe More Than Your Newer Jacksonville Home Is Worth?

If you purchased a newly built home in Jacksonville or Northeast Florida during the market peak and now need to sell, don't assume you have to stay in the property simply because your mortgage payoff is higher than its current market value.

A short sale may allow you to sell the home for its current market value even when the proceeds aren't enough to pay your mortgage in full.

At Reid Real Estate Group, many of the short sales we're currently handling involve exactly this situation: homeowners who purchased newer construction during the peak years and now need to sell at today's lower market value.

If you bought new construction between 2021 and 2024 and are concerned that you may owe more than your home is worth, we can help you determine what options may be available.

A short sale allows you to sell the home for less than you owe on the mortgage balance, with the lender's approval. Most short sales allow for full debt forgiveness of this extra debt.