by Michele Newbern Gillis
Staff Writer
We’ve all attended meetings where speakers like Charlie Clark or Henry Fishkind gave their take on the economical and real estate outlook for Northeast Florida, but as a relatively new speaker to Realtors, Ray Rodriguez of Real Estate Strategy Center of North Florida Inc. was entertaining, informative and, most importantly, local.
He’s been in Jacksonville since 1984 and has been in business with his family for 12 years.
“My office is a family owned business and we do no outsourcing,” said Rodriguez. “What that means is that we process all the deeds by hand. Everything that sells from $1,000 and up — residential and commercial — we process and put into our database.”
Rodriguez shared his view of the real estate market as it stands right now.
“People want to know if there is going to be a housing bubble,” said Rodriguez. “I say no, there is going to be a housing fizzle. The market is just going to slow down a little bit. We are not going to go negative, especially here in the Ponte Vedra Beach.”
By getting his information locally and processing many of it by hand, Rodriguez is able to get very detailed statistics of our local real estate market.
“Normally, in my presentations, I like to kick it up a notch,” he said. “You will see a different presentation than others have done. I’m going to show you how the market is changing, not necessarily only in Ponte Vedra Beach, but in Jacksonville as a whole.”
His presentation, Northeast Florida Real Estate: A New Environment, centered around what the real estate market has done, is doing, market conditions, local and national market conditions that are changing the local real estate landscape and the outlook of real estate including how Realtors can profit from it.
Rodriguez said in Ponte Vedra Beach, new home sales from 1999-2005 have increased 15.2 percent annually and existing home sales increased 7.6 percent annually.
He said home prices in Ponte Vedra Beach from 1999-2005 for new homes have increased 5.2 percent and existing home prices have increased 8.8 percent annually.
Rodriguez said in the Jacksonville Metropolitan Statistical Areas, apartment conversions accounted for 65 percent of new condo units in 2005. In 2006, so far they accounted for 53 percent of new condo units.
“I do not recommend any of my customers or potential customers to introduce an apartment conversion,” he said. “The inventory is starting to increase and there are a lot of unsold units out there, not necessarily in Ponte Vedra Beach, but you know that a lot, if not all, of the apartment complexes in Ponte Vedra Beach were converted to condominiums. That is going to play a key role as we move into a buyer’s market. What’s going to happen when people come to Ponte Vedra Beach looking to rent? They are not going to find it. What does that mean? Supply and demand will make rent prices go up.”
Rodriguez said it is a good time for investors to come in and buy the converted apartment units for future use.
“In 2005, 88 percent of the homes sold in Ponte Vedra Beach over $1 million were homesteaded,” he said. “That is good news. That means the people buying these homes want to stay here. They like the quality of life in Ponte Vedra Beach.”
Non-owner occupied homes also seems to be of interest to Realtors.
“Of the homeowners who purchased a new home in Ponte Vedra Beach as a non-owner occupied, 40 percent live outside the MSA and 60 percent live within the MSA,” said Rodriguez. “Of the homeowners who purchased an existing home in Ponte Vedra Beach as a non-occupied owner, 49 percent live outside the MSA and 51 percent live within the MSA. There are a lot of people who live in Ponte Vedra Beach that own property in Ponte Vedra Beach.”
Rodriguez did a relocation analysis to find out where the people went after they sold their home in Ponte Vedra Beach.
“Ninety-percent left the MSA,” he said. “Of those that stayed, 42 percent remained in Ponte Vedra Beach; 32 percent stayed in St. Johns County and 26 percent relocated to Duval County. Thirty-two percent of these people increased their housing cost and 68 percent decreased their housing cost.”
Overall, he said price per square foot in golf/gated communities in Ponte Vedra Beach is leveling off, oceanfront is fluctuating and Intracoastal, apartment conversion, regular condominium and single family are continuing upward in price.
Rodriguez shared some statistics of how different areas responded to price inflation over the last seven years.
He said Anastasia Island prices went up 14.1 percent with new and resale homes and 13.6 percent without new home sales. Atlantic Beach prices went up 11.4 percent with new and resale homes and 7 percent without new home sales.
“A lot of the price appreciation in Atlantic Beach was because of the new construction,” he said.
Fernandina Beach prices went up 10.3 percent with new and resale homes and 12.7 percent without new home sales.
“The price went up without new home sales,” he said. “That means resale prices are going up. In Jacksonville Beach, prices went up 14.7 percent. If you take away new construction the number drops to 11.8 percent.”
World Golf Village prices went up 8.1 percent and rose to 11.2 percent when new construction was taken out.
He said a lot of new homes were constructed because of the low interest rates and many increased their home prices causing an increase in resale value.
“Ponte Vedra Beach has seen a 7.6 percent price adjustment over the last seven years,” he said. “Take away new construction and the number goes up to 8.8 percent. Why is this number lower than other areas? Ocean Links and Grand Cay were apartment conversions three or four years ago. Those conversions affected the numbers regarding the Ponte Vedra Beach home prices. They were entry level products and when you throw them into the mix that will drive home prices lower.”
National and local market conditions change the local real estate market. Issues such as Baby Boomers (58 plus), slowdown in the housing market, publicly traded builders downgrading their future earnings, housing bubble rumors and rising fuel costs all affect the local real estate market, he said.
“Yes the market is slowing down,” said Rodriguez. “Buyers should be choosy right now. As it becomes a buyer’s market, there are more products to choose from. If you look at the top 25 builders, 15 of them are doing their own thing. They are buying their own land and developing their own projects. That is bad news for developers. Developers used to depend on builders to buy lots from them to finish their project. Developers need to be a little bit creative.”
Rodriguez said those in the real estate market need to recognize that there is an increasing minority population.
“In the Blueprint for Prosperity Plan, it predicts that by the year 2027 50 percent of the population in Duval County will be either black or Hispanic,” he said. “My question to the builders is how are you going to do business 20 years from now with a population that makes half of what people make now? How are we going to sell the same product to a group that makes half the amount of money? The population is growing. We have about 75 people a day moving into Jacksonville. Right now, Hispanics account for 4 percent of home sales and that number is growing. Hispanics own over 84,000 residences.”
He said those who are relocating within Jacksonville are relocating within the I-295 loop.
“We had the suburban sprawl, but for whatever reason, people are starting to come back for various reasons,” said Rodriguez. “Reasons could be fuel, the cost to commute from here to there or the cost of housing. People want to live close to where they work. If you look inside the I-295 loop, that is where people are relocating to. That is the area of preference.”
New communities that are changing the local market are active adult communities, downtown living and mixed use.
“Downtown Jacksonville is slowly progressing,” he said. “I know the mayor has his goal of 10,000 housing units. I see that more as 5,000 than 10,000 because where are you going to put them? If you convert all of the old office buildings to lofts or condominiums, what’s going to happen when the office market comes back? Where are they going to go?”
Rodriguez also said that anyone who has an interest-only loan needs to refinance to a fixed rate as soon as possible before the market adjusts.
“The Federal Reserve predicts $2 billion worth of mortgages to adjust in 2006 and $1 trillion worth of mortgages will adjust in 2007,” he said. “The average adjustment in household payment is $500.”
photos by Michele Newbern Gillis