Real estate market moving, heating up

Real estate market moving, heating up

Although there may be some debate among real estate brokers as to whether the temperature of the housing market in the historic districts is “hot,” “super hot,” or merely “warming,” one thing is for certain: inventory is low and well-located properties, in good condition and which are priced right, do not sit on the market for very long.

“Things are selling quickly, especially homes that are priced well. My last couple of listings have received multiple offers in the first week. One was under contract in the first five days,” said Laney Smith, founder and broker with Cowford Realty and Design in 5 Points.

Sheron Willson, broker-manager of Berkshire Hathaway HomeServices Florida Network Realty in Avondale, agreed. “It’s a really good market as far as properties are selling quickly. Most are less than 90 days,” she said. “What’s significant is that inventory is low. When properties come on the market and are properly positioned, which includes condition and pricing, they will sell very quickly, sometimes even before they are officially on the market.”

After suffering from the devastating real estate recession in 2007, it has taken housing values in the historic districts nearly 10 years to recover. Fred Miller, CEO, broker/owner of Fred Miller Group Realtors in Ortega, describes the market as “warming up,” saying the future shows great promise due to seller confidence.

“The climate for appreciation for residential real estate values is getting better by the month,” Miller said. “Home sellers are coming into the market. In a year or two it will be a full-blown increase in values, and it is getting faster and stronger as you go east in Jacksonville, however, oceanfront values are not back yet,” he explained.

“From Amelia Island to St. Augustine, it is as high as it has ever been, and it has surpassed values since 2007, but oceanfront has not,” he continued, noting one oceanfront property, which was listed in Ponte Vedra at $15 million, only sold for $5 million. “Riverfront values are going up faster than non-riverfront, but they are not rocketing up. Recovery is still nascent. It’s not like striking gold.”

“If you compare the market now to 2005-2006, which was the hottest market, this is not that hot,” said Gonzalo Mejia, broker associate at Watson Realty Corporation’s San Marco/San Jose office. “But if something is listed at the right price, trust me, it will be gone.”

Jeff Chefan, CEO at Manormor Sotheby’s International Realty in San Jose, also concurs. “The confidence level in the marketplace is there,” he said. “But it’s tough to do a blanket statement that it is hot.”

The market is scalding in Nocatee where the number of houses sold in 2016 rose 103 percent over the year before, and also in Northeast St. Johns County where it is impossible to find a vacant lot on the ocean for less than $3 million, Chefan said.

“Meanwhile on the river here, it is difficult to find an 8,000-square-foot home for that price,” he explained. “We sold an 8,500-square-foot home with two acres of land on the river for $3.5 million. Prior to the crash, River Road and Ponte Vedra Boulevard were comparable in values to land and home. When you say the market is hot, it depends on what area, price point and product. Is it a resale, land or new construction?”

In Jacksonville, as a whole, overall sales prices went up seven percent over the past year, said Clark LaBlond, director of career development at Coldwell Banker Vanguard Realty in Avondale. “The bottom line is inventory is tight overall in Jacksonville,” he said, noting to get a more accurate picture of how the historic districts are doing, each neighborhood should be considered separately.

“The historic districts, I wish I could lump them all together, but they are very different markets,” he said. “Generally speaking, these markets did very well during the past year. At the end of the year, inventory was so low, so demand was higher.”

Statistics in historic districts

The following is a breakdown of real estate statistics for each historic neighborhood from December 2015 to December 2016 according to the MLS:

In Avondale, the number of houses sold rose 14 percent; the average sale price rose six percent; the median sale price rose 13 percent with the median sale price in 2016 at $250,000; the average number of days properties were on the market dropped eight percent.

In Riverside, the number of houses sold rose seven percent while the average sale price rose eight percent; the median sale price rose one percent with the median sale price in 2016 at $186,000; the average number of days properties were on the market dropped nine percent.

In Murray Hill, the number of houses sold rose nine percent; the average sale price rose 14 percent; the median sale price rose 33 percent with the median sales price for 2016 at $104,250; the average number of days on the market dropped three percent.

In Ortega, the number of houses sold declined one percent; the average sale price rose five percent; the median sales price declined one percent with the median sales price in 2016 at $280,000; the average number of days properties were on the market dropped one percent.

“Murray Hill has a younger demographic and is in transition. The homes there are traditionally smaller, but people will give up square footage just to live in this area,” said Lorri Reynolds, managing broker/vice president of Watson Realty Corporation in Avondale.

“Riverside is seen as fun and up-and-coming. Avondale is charming and stands on merit,” she said. “People in Ortega love living in Ortega and don’t want to move. People living in Ortega stay there.”

Meanwhile in San Marco, the market is consistently hot, said Missie Sarra LaPrell, a realtor with Re/Max Specialists. “People want to live in San Marco because of its charm, character, its village concept and the fact it lies in the hub of (Jacksonville’s) wheel, making it easy to get to the beach and other places. People like Lake Marco. The schools are good, it is close to the hospitals and there are so many parks. These features are critical to its popularity,” she said, noting living in the Hendricks Avenue Elementary district is particularly attractive to young families.

According to MLS:

In San Marco, between December 2015 and December 2016, the number of houses sold declined two percent; the average sale price rose 14 percent; the median sale price rose five percent with the median sales price in 2016 at $273,000; the average number of days properties were on the market dropped nine percent.

In San Jose, the number of houses sold rose seven percent; the average sale price rose 11 percent; the median sale price rose 14 percent with the median sales price in 2016 at $174,000; the average number of days properties were on the market dropped 17 percent.

In St. Nicholas, the number of houses sold rose three percent; the average sale price rose 13 percent; the median sales price rose 30 percent with the median sales price in 2016 at $120,000; the average number of days properties were on the market dropped eight percent.

During the recession, when the bottom dropped out of the market, out-of-town buyers and “flippers” came in and invested in the historic districts, said Janie Boyd, founder/broker of Janie Boyd & Associates in Avondale. “They took a lot of the houses and fixed them up,” she said. “Now the neighborhoods have new construction with renovated homes, and we have a whole new market. Two-income families want new construction. Our neighborhoods have benefited from that.”

First-time home buyers are also pleased to purchase flipped houses because often they are on tight budgets and do not have money to make renovations, said Linda McMorrow, broker/owner of The Legends of Real Estate in San Jose. “Those with really tight budgets are happy to buy homes that are not updated. There is a lot of competition in that part of the market. Sales have not dwindled.”

In San Marco, brick bungalows are in high demand, and since many have been updated with additional square footage, buyers are relishing the option of buying slightly larger homes, said LaPrell.

Smaller houses always sell because they are more affordable, said Sally Suslak, broker, with Traditions Realty in Riverside, adding that homes priced from $400,000 to $1 million are considered the “move-up” market. “Everything is in demand, with bungalows being in high demand,” said Willson.

Average home sales price increases in 2016 over 2015

Low inventory drives market

There are less than five months of inventory in the historic districts, with less than four months’ supply in Murray Hill, said Willson. “In the historic districts, we don’t have a developer to increase inventory. We depend mostly on the resale of current properties. Many people think they might like to sell, but where would they go? Some people are very happy where they are. Some people are waiting,” she said, adding now that some homeowners have rebuilt equity since the crash, realtors are starting to see a “come on.”

Lack of inventory can also hamper the market because buyers have so little to choose from, said Suslak.

“Inventory is low, and people are buying, so if we had more inventory things would sell faster because people would have more to choose from,” she said. “People want to look at several things to know what’s out there.”

“The market is being driven by lack of inventory,” Mejia agreed.

And although one might think low inventory might cause a spike in prices, this hasn’t necessarily been the case.

“Nocatee is up 103 percent because they have inventory. They can’t keep up and build enough,” Reynolds said. “The fact that you have multiple contracts makes the market hot, but not hot enough. If you don’t have enough listings, it is not hot with frequency. 2016 was a surprising year in that most of us expected to sell more, but the problem was there was not enough inventory,” she continued.

“Even though we saw increases in median prices in Avondale, Ortega and Riverside in single-family homes, as well as an increase across the board of median prices in Jacksonville, there still was a shortage of inventory. Sellers who are thinking about selling should put their house on the market, not only because of demand, but also because interest rates are rumored to be going up and probably will,” Reynolds said.

Interest rates gradually rising

Interest rates went up 25 basis points from 3.25 to 3.50 a few weeks ago, said Miller. “It would be nice to see Janet Yellen leave it alone. Rates are inching up, and I expect we’ll see another small increase this year.”

However, slightly rising interest rates aren’t necessarily a hindrance to the market. Often they serve as a clarifying factor for buyers who are unsure whether to jump in, said Laney Smith. “Having them go up slightly encourages people to make their plans,” she said. “It’s hard to play the market right. You just need to jump in when we have houses to choose from.”

Although the rates “blipped” upward recently, McMorrow said she thinks they have stabilized. “Even when interest rates were 15 and 16 percent, people still needed a place to live so they just paid it and didn’t look back,” she said. “Later, they refinanced. Interest rates don’t really stop a thing. At the end of the day, people proceed.”

Mejia agreed. “Interest rates are still low. For some people, it will make a difference, but those people should realize maybe they should have bought something before. They need to take advantage now,” he said. “We’ve seen a change in interest rates, but it doesn’t impact affordability. I doubt they will skyrocket in the future. We’ve talked about them going up over the last three years. They will go up some, but not skyrocket to seven percent or higher. Maybe they will go closer to five percent.”

Political winds changing

Although brokers in the historic districts differ as whether the election has had any impact on the real estate market, nearly everyone agrees things have been “positive” since the new administration came in last November.

“I think the general outlook with the political change is positive for real estate,” said Lee Norville, owner/broker of Norville Realty. “I think there is a lot more confidence in our real estate market.”

Chefan agreed and said he has noticed a greater sense of “stability” and a higher “confidence level” among his clients, especially in their desire to “move forward” with their businesses. “The new administration’s commitment to growth has impacted the market positively,” he said.

Boyd said she does not think national politics has any bearing on the market and believes people are generally more confident. “I don’t see the political climate in my business,” she said.

Meanwhile, McMorrow said people are responding positively to the booming stock market, which has risen substantially since the election. “The people I deal with are very optimistic and positive due to the stock market, which has responded in great favor,” she said.

Not one to discuss politics, Barbara Swindell, founder and broker of River Point Real Estate in San Marco, said, “Everyone has the feeling the economic situation is up in general, borne out of the news and the stock market.”

However, Smith said her clients, particularly those from overseas, are more cautious. “I think it (the political climate) matters,” she said. “People want to see how things will play out because there have been so many changes in such a short time. My international clients are especially cautious. Some of them have been nervous about purchasing a home.”

Financing eases

With new growth and a new attitude in Washington, some brokers have noticed financing is becoming more flexible, with some rules easing.

“I’m already getting emails from lenders saying they can get buyers qualified at a ‘500’ credit score,” said Reynolds, noting the mortgage process could be “dumbing down” with lower credit scores. “Already lenders are saying, ‘send me your buyers,’ but if there is chance they might default that does not make me happy. That is okay for a short-term sale, but in the long term it will collapse the industry.”

Helping to keep things in check are appraisals, Reynolds said. “The appraisal must validate the purchase. We’ve seen some appraisals not hold. I think appraisals are going to help restrict what happened in 2006. Appraisals inherently restrict values in the market. They are a check-and-balance to prevent runaway inflation.”

LeBlond said he has also noticed financing is starting to ease, but with the existing safeguards still in place he believes the market will continue to be strong and stable. “Lenders are more flexible with the options they are offering their customer base,” he said. “It’s a good thing when buyers have options. We still need to use caution. Lending guidelines are still strict but there’s an opening up to different kinds of loans.”

Overall, brokers in the historic districts see a rosy future in Jacksonville real estate. “Just generally, we are seeing growth in the city. Businesses are growing, relocation is happening. It’s good for our economy. The confidence level is there. People are recognizing how good our quality of life is in Northeast Florida,” said Chefan.

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