If it feels like you’ve been seeing a lot of luxury apartment construction recently, it’s not a trick. The data backs up what your eyes have been telling you. Nationwide, nearly 80 percent of new apartment construction is luxury or high-end development. In Jacksonville, during the first 6 months of 2018, it’s believed every single new apartment construction project was deemed to be luxury.
A couple of different factors are driving this trend. The biggest one is that real estate developers have been betting big on the idea that Millennials and the next generation coming-of-age will be less inclined to deal with the hassles of homeownership. Instead, even the young skilled professionals are going to look at luxury rental opportunities before buying a single-family detached home.
At the same time, the fact that the huge preponderance of units are entering the top end of the market also helps explain why even as the supply grows, the average rental price is poised to go even higher. Arguably, the price point these luxury apartments command are helping to fuel the rise in the average home price as well.
As with other areas of the country, the downside is that, due to the cost of land and materials, it’s not profitable to build truly affordable new construction apartment buildings, as well as condos and townhomes. This means there’s a growing segment of the market that must live farther and farther away from the city. The good news is that Jacksonville has long been one of the most affordable places to live in the country and thus can more easily accommodate higher rent and homeownership costs than other areas.