Category Archives: Jacksonville

Optimism is a great thing.  This is an outstanding time to be in real estate, and for many people this is a time of opportunity and promise as they look to move up or simply to become a homeowner for the first time.  I say it every day, and I mean it.

You also have to acknowledge that this is a very challenging time for many.  For those who bought or re-financed their home 3-5 years ago and need to move, or are being hit hard by the economy of the last few years – the real estate market is something that gives them concern and worry.

Because of that, I think it is the responsible thing to do make sure that you temper your enthusiasm and stick to the facts as they exist and to provide a full picture of the market so people can make an informed decision.

In the above-the-fold in the Money Section of the Times Union on 27 MAY, Kevin Turner had an article “Foreclosure sales for area plunge” if not read carefully may lead some to a false view of this market.

Foreclosure sales in the Jacksonville metropolitan area during the first quarter of this year dropped by more than 43 percent from the first quarter of 2010 and by nearly 21 percent from last year’s fourth quarter, according to data released Thursday.

Read critically though – note the bold (my emphasis).

The results could be an anomaly because many loan services froze foreclosure actions last fall, some foreclosure specialists have speculated. But most of those freezes have since been lifted.

It also could mean that foreclosures are selling so briskly, the supply is beginning to dry up,

“Could” is not “is” or “will.” Closer to “may” and “I’m guessing here….”

Over the last 12 months, lender-mediated sales have been over 60% of the market in areas as diverse as Dinsmore/Northwest Duval to Fleming Island-NE. In places as desirable as San Marco and Avondale they were in the mid-30s. Ortega is the best at just a little over 19%.

There is still much work to do as some areas have improved in the last few months – while others have gotten worse and still more – like Ortega – remain roughly the same.

In general, when looking at market statistics, due to seasonality and external market factors (incentives, legal issues etc) try not to look at too narrow of a set of data.  One month, or one quarter for that matter, does not a market make.  Even comparing one quarter year-over-year can be a problem.

Additionally, it is best when looking at the distressed property market to not just focus on one part of it, like foreclosures/REO.  There are other parts of that market that includes short-sales/pre-forclosures.  If you want to get an understanding of where the directions of distressed properties is taking the market, you need to include all parts of the distressed property market – and look at a broader time scale.

Those who invest in stocks, commodies and other instruments, understand the concepts of trend-lines and “higher-highs & higher-lows vs lower-highs and lower-lows” and how they help you spot a change in market direction.  You have to look medium & long term, not short term.

See the graph below of closed sales that are lender-mediated.  If you draw a line from the low at the end of 2008 to the low now, and then draw another line from the high at the end of 2008 to the high in FEB of this year – there you have your “market channel.”  What you need to do is watch where the market goes inside that channel.

To really be able to say that we have seen a turn in the lender-mediated part of the market, then we need to see the lender-mediated percentage break the lower part of that channel and stay below it for a sustained period.  If after it falls below it, then increases again to touch the line but does not break through it for a sustained period and falls again – and then I think people could comfortabley say something significant has changed, and should say, “We may have seen a change in direction in the market starting about six-months ago.  Markets can change, but for now it seems ….. ”

After this Fall, we have seen some indications of a market trying to get its feet – but at this stage of the game I would offer to everyone to practice “cautious optimism.”  It is your money and your property – fact based, serious decisions are what you need.

We will need more time to “digest” the lender-mediated part of the market, and until we do, as you can see below – we will need more time to see price, what concerns people the most, find a soft landing.

I’ll leave you with the summary from NEFAR for the month of April, the last month we have data for.

The final month of year-over-year comparison to last year’s tax incentive market is upon us. It bears repeating that April 2010 enjoyed uniquely strong activity due to the approaching credit deadline. Let’s see how this pivotal month played out locally.

New Listings in the Northeast Florida region decreased 34.6 percent to 2,314. Pending Sales were down 13.2 percent to 1,642. Inventory levels shrank 23.8 percent to 12,415 units – a positive trend that should preserve market balance. Prices were still soft. The Median Sales Price declined 8.1 percent to $125,000. Days on Market increased 18.0 percent to 123 days. The supply-demand balance improved as Months Supply of Inventory was down 26.2 percent to 8.9 months.

Nationally, the interest rate is 5.0 percent on a 30-year fixed conventional and the unemployment rate edged up to 9.0 percent in April, even as the economy added 244,000 jobs. Job seekers showed more confidence, a potential indicator of future housing demand. Moving forward, expect a different story to unfold in our market. We’ll soon be comparing current activity to a post-credit slump that occurred during the summer and fall of 2010.