Have prices for Jacksonville real estate hit the bottom yet? Hardly a day goes by without someone asking for my opinion.
I know that they don’t really expect me to have the answer. They’re just looking for another opinion and since they know that I study the market carefully, they want to factor my opinion in with all the others.
The truth is that nobody knows if the price on any particular house is at the bottom. Most people know that the vast majority of houses will actually sell for less than the asking price but that’s not really the question or the issue.
People who are considering buying real estate in Jacksonville want to know the answer for an obvious reason: buyers of real estate want to pay the very lowest price possible.
But there is a huge problem with this goal and even with the question itself.
The problem has to do with price versus cost. Real estate prices in Jacksonville may very well go lower... in fact, when I gaze into my crystal ball, that’s exactly what I see; prices will inch a bit lower before they stabilize and begin to rise again.
So, from a strictly economic perspective why would anyone buy today if prices will be lower in the near future?
The answer lies in the crystal balls of people who are far more knowledgeable than I. To find the answer, just do a search of economists predicting rising interest rates or read the predictions of folks like John Paulson, the multimillionaire (or ‘billionaire’... who’s counting?) hedge fund operator who made a ton of money betting against the subprime mortgage market not so long ago.
I think it was Paulson who recently said, “If you don’t own a home, buy one, If you own one home, buy another one an if you already own tow home, buy a third.” He went on to say,..."and lend your relatives the money to buy a home.”
That’s pretty strong advice from someone who has historically shown himself to know what he’s talking about.
Look... If your goal is to pay the lowest price for Jacksonville real estate then you’ll probably want to wait awhile before making that purchase.
However, assuming you’re not a cash buyer, if your goal is to obtain the lowest cost on Jacksonville real estate then your window of opportunity is very narrow, indeed. In fact, that ship may be leaving port right now.
Without going into or worrying about predictions of double-digit inflation by 2012, the impending death of the bond market or the restoring strength to equities and gold, etc. let’s just look at rising interest rates and their affect on the cost of home ownership.
One thing that everyone agrees on is that interest rates are going up. The super low rates we’ve seen recently are soon to be history once again and here’s the facts:
A 10% reduction in home prices is pretty wiped out by just a 1% increase in interest rates.
Stop and think about this for a minute and put real numbers to it. If you bet on prices going down another 10% (which I think is a very real possibility) and also bet on interest rates remaining the same, then you’ll come out better by waiting.
However, if prices do drop another 10% but interest rates increase more than 1% (a very real probability) then you lose by waiting to purchase... in fact, you stand to lose a lot!
Anyone who is in a position to buy Jacksonville real estate right now really should examine the numbers very closely. Our team of professionals at www.MyJaxHomeTeam.com, which includes mortgage experts, real estate attorney, buyer agent specialist and more is here to assist you in looking at your options so that you can make the decisions you feel are best for you.
Call us today for a free, no-obligation, no-pressure consultation. We’re happy to help.
ABOUT THE BLOG OWNER
TIMOTHY H. FENNELL, PA
Tim Fennell is a Florida licensed Real Estate Broker with The Legends of Real Estate, REALTORS® in Jacksonville, Florida.
His strong background in business development, real estate investments, counseling and marketing greatly enhance his skills as a Listing and Internet Marketing Specialist.
Tim and his wife, Susan, have over 30 years experience in Jacksonville Real Estate sales, marketing and investing. Both are Accredited Consultants in Real Estate (ACRE®). When you're ready to be consulted with, rather than sold to, give Tim and Susan Fennell a call.