Analyst: local real estate market slowing, but will rebound
University of North Florida real estate professor Sid Rosenberg has made a living analyzing real estate markets for the past 35 years – and through relatively smart growth, a solid economy and minuscule unemployment, Rosenburg says the Jacksonville area real estate market will rebound from anything resembling a bubble.
“I am not a pessimist about Jacksonville at all,” Rosenberg told the Rotary Club of Jacksonville Monday. “Compared to other markets in Florida, it is a lot healthier. However, we are fooling ourselves if we don’t think there’s been a slowdown.”
He’s seen the recessions of the 1970s and ‘80s. He’s watched as areas of Florida have created an atmosphere where supply exceeds demand and the local median home price isn’t in the same area code with the local median income. Rosenberg said past local real estate downturns can be directly attributed to a struggling economy, high interest rates and high unemployment — three economic factors the Jacksonville area has been fairly insulated from during the past decade.
Rosenberg, who has his degree in both real estate and finance and has lectured and taught on the subject all over the world, said 2004 was the time when the local real estate market began to see a slight downturn.
“A new home became unaffordable to the Jacksonville person who made a median income,” he said. “During that time, there was a sharp rise in prices.”
In June, the median home price in Jacksonville peaked at just over $213,000. Since then, it has fallen steadily and stood at about $197,000 as of October. According to Rosenberg, this is good for both the buyers and the developers — homes are becoming more affordable and developers are starting to move inventory.
The same is not true in other parts of Florida – particularly in the Southwest part of the state, where the median home price is nearly double the median income.
“You can clearly look and say that the Jacksonville market is holding up better than any other,” said Rosenberg, who joined UNF in 1991. “We have finally seen a drop in median homes prices.”
Rosenberg says the median home price needs to drop about another 15 percent. Between fluctuating mortgage rates and the other costs of living, a drop of 15 percent — that would make the local median home price about $165,000 — would allow many to purchase homes who cannot afford them right now and haven’t been able to for several years.
Rosenberg said one of the biggest problems with the real estate market right now is homeowners and developers wanting more than market value for both older and new homes.
“A lot of people keep asking prices [that are] too high,” he said. “This is normal. Some will drop their prices, and we will see slowing depreciation. There are all kinds of exceptions, but housing prices right now are about 13 percent too high.
“Southeast and Southwest Florida are in a lot worse shape than we are. But, even they are starting to turn around.”
Other notes from the Rotary Club of Jacksonville meeting:
• Rosenberg wasn’t the only Washington and Lee University graduate in the room. Rotary President Dr. Jerry Knauer and Property Appraiser Jim Overton also attended W&L.
• Times-Union publisher Carl Cannon was voted president-elect. He’ll take over for architect Jack Diamond, who will succeed Knauer in July.
• Five new members of the board of directors were elected for the 2007-08 Rotary year: Pierre Allaire, Cecilia Bryant, John Fryer, Russell Skinner and Rick Stein.