RESIDENTIAL REAL ESTATE OUTLOOK by Eric Milstead Nai Pensacola Commercial Real Estate Pensacola is booming! From downtown to the Beulah corridor, Pensacola is experiencing growth with increasing demand for housing. Buyers, sellers, realtors and builders had another busy year in 2019. Drivers of the market include the expanding radius of the downtown area, increasing growth in the Nine Mile Road area, and rising rents which push renters into home ownership. Low interest rates on mortgage products and zero down programs for first-time home buyers also contribute to the market growth. Increasing job opportunities have attracted even more people into Pensacola. Young talent is staying in the area and others are moving into the area for the great quality of life offered in Pensacola. Pen Air Federal Credit Union, Navy Federal Credit Union and ST Engineering are just three examples of corporations that are adding jobs in Northwest Florida, all with average pay scales that will accommodate a comfortable lifestyle in the area. Furthermore, retirees are also flocking into the area. A moderate cost of living, mild weather and active city are drawing retired people to Pensacola. Both sets of buyers are looking for the same options in a home, which include low maintenance, a convenient location closer to the downtown area, new or newly renovated, and easy access to 46 | Business Climate | 2020 / 2021 Annual Real Estate
activities and beaches. The retired buyers normally pay cash and also want newly renovated and updated properties that require no further repairs. Both buyer sets were key drivers of real estate sales in 2019. Downtown Pensacola, for many years has been centered around Palafox Street and expanding a few blocks to the east and west. New developments to the east are now reaching the waterfront, so the city is growing and redeveloping to the west. Properties west of Palafox, stretching to Pace Boulevard, are in high demand. In addition, rental units are running close to 100 percent occupancy. The demand for new construction and newly renovated housing is very strong. Entrylevel new homes are selling between $170 to $225 per square foot making the average new home price between $205,000 to $289,000. These homes are typically 1,200 to 1,600 square feet. They are located on small lots with low maintenance exteriors and interiors. “Move in and Plug in” is number one on buyer’s list of demands. They want to move in, plug in and go back to their daily lives, without having the weekends tied up with home projects or yard work. Therefore, new or newly renovated homes are prime for commanding top dollar and short marketing times. Luxury units downtown including luxury singlefamily homes are selling for starting at
$300 per square foot. These units are very popular with professionals and retirees. This buyer set is looking for all of the conveniences of living in the urban core and still have the amenities such as garages and pools, which are typically sacrificed when living in a town center. Rental rates in the Pensacola area have continued to climb in 2019 and demand has kept its pace. The average rent for an apartment in Pensacola is $978, a six percent increase compared to the previous year, when the average rent was $920 according to RentCafé. Thus, encouraging investors to jump into the property business. Investors are moving money out of the stock market and taking advantage of low interest rates to purchase properties to use as rentals. Therefore, the available units continue to be depleted by investors. According to Zillow, the average listing price in the Pensacola metro area is $235,000 reflecting at 3.8 percent increase over the last 12 months. The average rate on the 30-year fixed mortgage fell to the lowest level since October 2019 to 3.69 percent as reported by Mortgage News Daily. At that interest rate, the principal and interest payment on a 30-year fixed rate loan with a 20 percent down payment would be $864 per month. Although the average list price has increased, the average payment
