We sent this article out to all of our clients in May and since then we have had more than a handful of people call or email and tell us that we should post this. It seems as though we aren't the only ones who recognize that there are plenty of good things to say about the market, and that we need to bang "the glass is half full" drum more loudly than those who are banging that it's empty.
Cheer up, Jacksonville. North Florida home buyers and sellers are in better shape than many are led to believe. Take a closer look at the facts!
A national research company that specializes in reporting key indicators to home builders and developers recently confirmed what our client, Brent Brown, developer of La Terrazza Luxury Villas, and I have already discovered: overall, home prices in Jacksonville have flattened out, prices are stabilizing, the "Bottom" appears to be in the rear view mirror, and the market has begun moving forward.
Area home builders are reported to have only a six-month inventory of single-family homes available. Based on my many years in the home building industry as a market analyst and strategist for regional and national home builders, this is an excellent indicator as the preferred inventory benchmark that home builders strive to maintain is four to six months of inventory.
MARKET WEAKNESS
The only apparent negative to the Jacksonville real estate market is that there is still an oversupply of condos and developed lots. Many of the areas condo projects are best-suited to entry level buyers, and there is much competition in the entry level condo market since both builders and speculators are competing for the same buyer. The majority of developed lots are in large communities or in areas that while suitable for speculators and "flippers" now hold little appeal for owner-occupied buyers. In fact, many developers have placed large communities "on-hold" until some of the market's current lots are absorbed.
CURRENT CREDIT AND MORTGAGE ISSUES
The recent real estate boom was fueled by low interest rates and a very loose credit approval process. As Joe Public discovered how easy it was to obtain a mortgage using only the spare change found in the seat cushions of their sofas they rushed into the market creating demand and driving price.
Still, the current rate of foreclosure is reported to be less than two percent nationally with ninety-three percent of mortgage holders paying in a timely fashion.
Current lending guidelines are stricter, but they make sense. Many loans were given to buyers who, upon closer look, could not possibly make future payments, and many loans were tailored for and lent to investors with short-term goals that turned into financial disasters when the short-term turned into the long-term.
To make certain that buyers can make future payments, lenders have reinstated income verification and credit checks. This is a more responsible approach to consumer lending as both the real estate and mortgage professional will now match homebuyers with homes and loan programs that they can afford down the road.
Presently, on conventional loans credit scores are used to help determine loan to value ratios, the interest rate charged, and the amount of mortgage insurance required. Typically, the better the credit score lower the the required initial investment and the lower the interest rate.
Buyers need to be aware that until their credit and income is verified, any rates, loan programs, or loan to value amounts quoted by any lender should not be relied upon.
MARKET STRENGTHS AND OPPORTUNITIES
While investors were content to snap up cookie cutter homes in cloned communities, today's home buyers are not. Recognizing that a part of the housing surplus and decline in pricing was due in part to the over production of tract homes, today's buyers are seeking to prevent future value erosion through alternatives to cloned homes and communities.
Who is doing well in this market? Builders who have moved away from the mass production of cookie cutter homes and those builders willing to make structural changes.
On the resale market, homes located in established, traditionally popular areas and neighborhoods are seeing increased showings and interest from prospective home buyers.
Remember: buyer needs vary and this creates opportunity. Some buyers would rather live closer to town than on the fringe of new growth. Others are willing to pay more to live in an older, established area such as Riverside / Avondale or the San Jose / Beauclerc areas. High gas prices and lengthy commute times create additional interest in and demand for these homes.
If you have a home to sell, have owned your home for several years, this could be the opportune time for you to make a move to a "new" home that better suits your current needs and lifestyle.
Don't wait until the "bottom" of the market is so distant in your rear view mirror that you miss the opportunity to make your move. While you may sell your current home for less today than a few years ago, you are replacing it with the home you want under the very same market conditions so your "new" home will be available to you for less today as well.
I agree with your comments on waiting for the bottom of the market. This is the same issue sellers had who were waiting for the top of the market and then missed it.
Nice post. Great idea to send the report to clients. Some buyers are going to miss out as no one has a crystl ball.