by Mike Sharkey
Staff Writer
Interest rates continue to climb and the national median home price remains on a steady upward trend. Those facets alone should be enough to give area real estate agents and those looking to buy or sell a home in 2006 reason to pause.
Don’t worry, says Ray Rodriguez president of the Real Estate Strategy Center of North Florida.
“We’re OK. We will let some steam off, but the bubble here won’t burst anytime soon,” said Rodriguez, who spends his days analyzing every aspect of the local real estate market from the number of new permits pulled in a particular development to the average price of a new condominium at the beach. “It will slow down a little bit and we will get back to reality. Speculative buying is slowing down a little bit due to rising interest rates.”
The local real estate market has been booming for several years now. The Northeast Florida Association of Realtors has more than 5,000 members and the number seems to be growing. The median home price in the four-county area (Duval, Clay, Nassau and St. Johns) goes up every month. Massive developments receive City Council approval at nearly every other meeting and several areas of town change practically overnight.
Blink and you may miss another condo going up at the beach. Look the other way and an entire street in Springfield could be renovated. Attend a meeting of the Sales and Marketing Council of the Northeast Florida Builders Association and just listen to the numbers.
Yes, it’s a good time to be associated with the industry and Rodriguez says those good times should last through the next year. But you may be surprised to hear where Rodriguez thinks the next explosion will take place
“The Dinsmore area in the northwest corridor could be a real area of interest for development next year for two reasons,” said Rodriguez. “One, it’s dry, not like the New Berlin Road area that’s wetlands and marshes. Two, it has good infrastructure. Three, it’s the only area left close to the I-295 corridor that’s affordable.”
One of the key indicators Rodriguez uses to forecast real estate development in a particular area is the permit activity filed with the City of Jacksonville. If hundreds of permit applications are filed for a specific area in a relatively short period of time, it’s a pretty safe bet that roads and houses are soon to follow. He said that’s exactly what has happened in the Dinsmore area.
“It’s been the most aggressive area and there have been a lot of concurrency applications,” said Rodriguez.
Not surprisingly, Rodriguez says the Butler Boulevard area and the beach will continue to flourish in the current economy and market. While there’s plenty of road construction in the area, Rodriguez says that’s not a deterrent to developers and potential home buyers.
“That area will continue to grow despite the construction and that growth will happen with two areas: the Southpoint area where people work and the St. Johns Town Center area,” he said. “That area is one of the hottest markets around.”
At the beach, where land is scarce, two things are happening. One, development is going vertical. There are several new high-rise condos and about 20 more that have been permitted by the City of Jacksonville Beach that have yet to come out of the ground. The other trend centers on either renovating existing older homes or tearing them down and rebuilding.
“I call it land refurbishing where small duplexes are being converted into condominiums,” said Rodriguez. “It’s still the preferred place to live. There’s no discounting that.”
Downtown, too, will continue to grow next year, says Rodriguez. The Southbank is proving to be the next big urban residential mailing address while the Northbank is quickly becoming the center of commercial development.
“I don’t see any cranes on the Northbank, but they will be there soon,” said Rodriguez. “The Southbank continues to grow and the Riverside area is growing. Keep an eye on the St. Nicholas area. There will be some new announcements coming soon.”
One area of real estate that does concern Rodriguez is those homeowners that took out interest-only loans. Rising interest rates and the fact those owners are not building up equity could lead to serious issues. Rodriguez believes that those who bought homes worth $250,000 or more may have troubles in the not-so-distant future.
“Those that bought in at that price range wouldn’t have if it had not been for interest-only mortgages,” he said. “Eventually, they are going to have to pay the piper and they won’t have any equity built up.”