Cd2009, Home Buyer in Jacksonville, FL

I heard from a friend in the industry that FL real estate prices will drop significantly in the next year and that I should wait to buy. Is that true?

Asked by Cd2009, Jacksonville, FL Sun Apr 15, 2012

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All we can do is look at the numbers, currently the job market is getting stronger and home sales are up year over year and inventory is down to a 6.5 month supply which is just higher than a "normal "market where we average 5-6 months of inventory. Interest rates are still below 4 percent and the government is putting increasing pressure on the banks to lend for money. Some banks are still holding shadow inventory but will be releasing it slowing not to flood the market with distressed properties. So I would say we are in for an up swing over the next few years, but no one has a crystal ball and gas may skyrocket and war may break out and we are back to square one. Only time will tell....
If your going to live in a home for at least 5 years the way I see if you rented for that time at the average $1000 a month you lose $60k so buying a house cant be that risky.

This is just my opinion, thanks for the great question.
2 votes Thank Flag Link Sun Apr 15, 2012
How can anyone know for certain? Prices have been relatively flat for the past year with a recent trend upward in a number of communities. Remember that all real estate is local - very local.

What effect the anticipated release of foreclosed properties by banks will have on prices is an unknown factor as well. Where these properties will be released and how many will, undoubtedly, have different affects on different communities.

Also, even if prices drop a little, if interest rates rise (as predicted by some) that increase could more than offset any reduction in price.

Personally, I've bought and sold real estate in all different markets because I "wanted to" not because some "expert" said that I should. I happen to prefer owning over renting... that is a personal choice and one that only you can make for yourself.

If you would like someone to bounce your thoughts off of, give me a call or shoot me an email. I'm happy to have a discussion with you.

Have a wonderful day!

Tim Fennell
1 vote Thank Flag Link Sun Apr 15, 2012
Cd, There are a few areas of Jax that will see a percent or 2 drop but most of J'ville has bottomed out. Time to get off the fence and get in the game. Good stuff going on.

Have a Great Day
0 votes Thank Flag Link Sun Apr 15, 2012
By the way, I can provide a detailed market analysis of whatever community you were thinking of buying in... that way you could decide for yourself if now it the time to buy or not. Shoot me an email if you're interested.
0 votes Thank Flag Link Sun Apr 15, 2012
I'm not from the Jacksonville area but one would hope that the days of "significant" declines in pricing would be history. Also markets can vary greatly across the state but Sarasota County has seen a good revival of RE prices. Based on REALTOR.COM statistics the Sarasota area inventory of single family homes has decreased over 31% in the past year while the average "asking price" has increased nearly12% during the same period.

This information may not have any significance to the Jacksonville market but it is something that buyers should keep in mind as the seek clarity in predicting the future. I'll go out on the limb and predict that we are headed in the right direction........

Good luck,

Bill
0 votes Thank Flag Link Sun Apr 15, 2012
Florida real estate prices....it the story of the have and have nots.

On the West Cost of Florida, particularly the Tampa Bay area, 40% of the communities have exhibited price stableization or price improvement over the past 18 months. If you have interest in the Dunedin, Palm Harbor areas, ask for my 'Market in a Minute' report.

Other communities are still falling...but they too will find bottom eventually.
So. it matters not what one predicts, the truth remains, real estate is a local affair.

When the market is exhibiting a shortage of quality homes in the 600 to 900 thousand market, that to me does not sound like a fire sale.

When the market is exhibiting a shortage of quality home sin the 250 to 400 thousand market, that to me does not sound like a fire sale.

Inventory being the challenge that it is you should wait for a year or two or three. The distressed properties will well on the way to being dispersed and the investors will have prepped them for resale. Now there will be a good inventory of freshly refurbished homes.

Now, with a better understanding of your purchase objectives, the recommendation may change. There are many things that can happen in Washington, Middle East or Wall Street that effect the housing market, and as history has taught us, logic does not prevail.
0 votes Thank Flag Link Sun Apr 15, 2012
First off you did not say that your friend works in Jacksonville. Based on their comment I will assume they do not. Ask your friend to show you evidence that supports this prediction. I'd be happy to show you market data that clearly paints a very different picture. I believe Jacksonville has turned the corner and will see modest price improvement in the coming months/years.

A good point was made earlier that when interest rates increase your cost of ownership will increase. For example using a purchase price of $150,000 and a 3.5% down payment your monthly principle and interest payment at the current 4% rate would be $691. If that rate goes up by just 1/2 point your new payment goes up $42 per month to $733. If you stay in your home 5 years that equals $2,500 and a whopping $15,120 over the life of the loan. Why do industry experts believe interest rates will go up? Two words. Quantitative Easing aka printing money. For the last couple of years the FED created an artificial demand for bonds through a bond buying program known as Quantitative Easing. This bond buying has been keeping long term mortgage rates down. The current (2nd) round of easing is due to expire soon. If/when this happens demand for bonds will drop and yields will have to increase in order to attract real investors. There is some talk about a new round of easing (QE3) but that has not been confirmed. With the intense focus on deficit spending a new round of easing will face stiff headwinds.

It gets better though. Considering that it costs more per month to rent a similar home you shoul add that extra cost to the money lost by waiting in hopes that prices will drop further. For example, the average rent for a home valued at $150,000 is $1,200 to $1,300 per month. To buy that same home the estimated payment would be approximately $950.00 (principal, interest, taxes & insurance). So the total cost of waiting amounts to nearly $300 per month or $3,600 if you wait for a year. That means home prices would have to decrease by another 2.5% over the next year just to break even. I honestly don't see that happening. This estimate doesn't even factor in the tax benefit of owning your own home.

I would suggest speaking with your mortgage professional to get pre-qualified and a good faith estimate. Compare what you are currently paying in rent to the cost of owning your home. I think you will be pleasantly surprised. If you decide that the time is right to invest in your own home I would be happy to work with you. Best of luck!
0 votes Thank Flag Link Sun Apr 15, 2012
WOW! Need to get out the crystal ball that your friend is using. Great answers from the other respondents. Experience in the Jacksonville area shows that trends can be community specific. So your reseach should be on the community or area that you are interested in. Your real estate agent can help you here (rembering that your real estate agent as a buyer doesn't cost you anything for the wealth of knowledge you will be able to get).

Another consideration that you need to take into account is the mortgage industry. Are rates, fees and availability of funds going to go up costing you more money to buy? The mortgage industry is already tight waiting could, as well as the real estate market, make it worse.

Let me know if you need some assistance. Always glad to help.
All the best
Charlie
0 votes Thank Flag Link Sun Apr 15, 2012
Predictions are very difficult; especially about the future.
0 votes Thank Flag Link Sun Apr 15, 2012
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