Real Estate in Northeast Florida and Around the World

At the top of every newscast, newspaper and radio broadcast is more information on the BP Oil spill.  Why?  Because it is a tragedy of unequaled magnitude that just won't stop. 

Unlike the recent earthquakes that did damage over a matter of seconds, and where cleanup could be estimated and started as soon as the earthquake quieted, this tragedy continues every moment of every day, making the charge to recovery a postponed event with every passing hour.  While BP's people in front of the media may be bungling responses, I have no doubt that there are many, many people working around the clock to discuss, analyze, test and implement the solution.  Engineers typically do not make good spokespeople - they are very good at what they do, but many times lack media worthy communication skills.  Although interestingly, the people that they have put in front of the media didn't get that right either.  I digress. Sorry.

Why am I writing about this?  Because of the direct and indirect effect on the Gulf region and specifically Florida.  In conversation with my colleagues in the gulf areas, they have seen a shying away from prospective buyers from oceanfront property, because of the fear the damage will reduce values along the coast.  The same is said for the already challenged South Florida real estate market.

What about Northeast Florida - what is the risk to our white beaches?  According to studies done at University of North Florida and Jacksonville University, it has been determined that Northeast Florida beaches are at a very low risk of contamination, as the gulf stream that would carry the red-brown sludge around our borders runs from 40 to 60 miles east of our coast line.  This is another blessing to not having the warmer gulf stream waters so close - the other of course, is that hurricances typically like to hold onto that warmth.  Our beaches appear to be safe - and while I hate to even say that because some may say it sounds as if I am bragging about our shores at the detriment to others, I am one that believes the attributes of Northeast Florida are not elevated enough.  Our hearts go out to those in the impacted areas - we also enjoy those gulf coast beaches in our personal lives, and suffer as an industry when our Florida real estate is suffering.  However, if you are a prospective investor who is shying away from Florida real estate because of the oil spill, don't overlook Northeast Florida.

This is not an article to slam BP or promote or condemn off-shore drilling.  Trying to simulate a disaster recovery plan where so many failures occurred is beyond most people's comprehension.  Eventually the facts will demonstrate the points of failure not only from the physical side, but from the planning and management side as well.  I was trained in process improvement and risk analysis in my former career, and what cannot be done now is a knee jerk reaction, even though that feels to us like that needs to be done.  The process to resolve this problem is one step at a time, analysis of all possible solutions and then applying the hypothetical improvement one step at a time.  Because, they have to solve this problem without creating another one.  The emotion that is being displayed from anger to grief does not create a solution - only the methodical scientific approaches that are being discussed and attempted will effectively work. 

My wish and everyone's wish is that whatever the  approach that will finally plug this bounty of oil is found and soon.  Our oceans and the undiscovered wealth of life that it contains and is in jeopardy depend of speed and accuracy in stopping this mess.  Our neighborhoods depend on it - ask me how next time you see me passing through your neighborhood.

You may have heard that Congress may be extended the Home Buyer Tax Credit, which expires today.  As always, the reader needs to be disciplined to read more than the headline.

On Tuesday, the House of Representives passed a bill which includes extending the tax credit closing period, allowing buyers who were under contract by April 30, 2010 to close as late as September 30, 2010.  What this will allow is for those buyers who are trying to close on a short sale transaction more time to get their transaction closed, although there are other types of transactions that will also benefit.

Because short sale transactions involve the lender approving accepting a short payoff, the amount of time to gain approval of the terms can be very lengthy, in some cases up to six months after the seller's accepts the terms of the offer.  While HAFA (Home Affordable Foreclosure Alternatives) sets out guidelines that buyers and servicers must follow, thus helping to standardize the process and reduce the processing time, it is still a lengthy process. 

So, if you are waiting to buy a home thinking that Congress will extend the tax credit, understand fully what you are waiting for - it does not appear that Congress will extend the overall program to allow new buyers to participate, only to give more time to those that were under contract by April 30, 2010.

For more information on the tax credit, please visit my page by clicking on the menu item to the left.  If there is other information that I can provide, do not hesitate to contact me by email (MissiHowell@MissiHowell.com) or telephone, 904-716-1713, or just stop me next time you see me around the neighborhood!

On a daily basis I am asked at least once about the state of the Northeast Florida real estate market.  How's business, is the market improving, what's going on, etc.  The answer is not a one word or a one sentence answer.  What we have is a Tale of Multiple Markets.

The first market is the one most discussed.  It is comprised of the distressed sales - the short sales and foreclosures.  42% of the overall closed sales in May 2010 were lender-mediated transacations, so the influence of this population is definitely still being felt in Northeast Florida.  This will continue to influence prices in this market, and in some cases in the non-distressed sales.  Some areas have greater than 50% of the homes for sale in the distressed or lender-mediated category, and in these areas, prices have seen the sharpest declines. 

The second market is the non-distressed market.  These are homes where there is no duress on the seller to sell, other than they want or need to for a reason other than they are in some type of financial distress.  Several areas in town have less than 20% of homes for sale in this category, and in a couple of areas, less than 10% of the homes for sale are distressed. This inventory is divided into 2 parts - the house that needs updated, and the house that is move in ready and updated to today's buyer's tastes.

So what is selling?  Depends on the buyer.  The thing to ask yourself as a buyer is what is most important to you?  Price, condition or location?  And if price is the most important thing, remember that sale price does not equate to what you will end up spending if the condition of the house is less than what you desire.  You may pay $20,000 less than market value to get your name on the deed, but you may end up putting another $30,000 for paint, carpet, updating the kitchen/baths or replacing a roof or a/c unit, all because the previous owner neglected to do any of these things.

I have had many buyers begin their process telling me "show me the short sales and foreclosures, I'm not afraid of paint and putting in my own sweat equity".  Until they go through this inventory and see about 15 or 20 houses that all have been neglected, they always think this is what they want.  Do I forewarn them?  Sure.  But this is a market where the buyer has to see it, feel it, smell it, etc., before they really understand what they want - and it typically is not something they have to put that much time/energy/money into.  Many people do not really understand the magnitude of what they are asking for until they are faced with it.  That's OK, I understand this and show them, because at the end of the day, I want my customers satisfied with their decision.

So - the distressed markets see the more drastic price declines and also the non-distressed sale, but where the house has not been brought up to snuff for today's buyer.  Today's buyer wants "move in ready" and "updates to today's look" - meaning the flooring, kitchen and bathrooms need to be updated, walls painted and absolutely clean.  Anything less will result in offers that will be surprisingly low to the seller.  As we learned in Econ 101, price is driven by supply and demand.  The supply of move-in ready and updated homes for sale is in short supply, and these are the homes - in all price ranges - that are not only getting their asking price when they are appropriately priced, but also are getting competing bids from multiple buyers.  The other houses - well, they sit on the market and eventually will sell - once the price has been dropped to "make up" for the deficiencies that the buyer feels is present.  This is why even with the inventory levels still above average, I have buyers asking "is this all there is?" when I show them the list of homes that have met their criteria.

If you want top dollar for your house, you need to understand that condition will always bring the highest and best offer or the low-ball offer.  And if you are looking for a "bargain", trust your real estate professional to help you find value - because lowest price does not equate to value - and in this market, you need an expert to help you understand the difference.  I am continually looking at our market inventory all over NE Florida, as my customers have varying needs and interests, and this market changes every day!  If you need help navigating through the neighborhoods, just give me a shout or a wave - cause I'll probably be cruising through - or better still, just give me a call and we'll chat over a glass of iced tea.

See you around the neighborhood!