We talked to local residential real estate experts to answer key questions about the state of the market in Gainesville today and how it might look in the near future.
Four years have passed since the real estate market crashed locally and nationally. With recent reports indicating some increases in sales and prices, both in Gainesville and in many parts of the country, new questions arise:
– Is it time for sellers to become optimistic?
– With both prices and interest rates low, why aren’t more people buying?
– Is the influx of new residents adding more buyers?
– Are foreclosures and short sales still dragging down prices?
The Business Report turned to Lauretta Fogg of Coldwell Banker M.M. Parrish Realtors, Betsy Pepine of Pepine Realty and Tommy McIntosh, president of Prudential Trend Realty and Trend Management Solutions, for the answers to these questions and more. Their answers might surprise you.
1. Are more people in a position to buy right now?
Pepine: More people are able to buy, and they’re able to buy “more house” because prices are down, but buyers are not taking advantage of that. They are being conservative.
They still ask, “What’s the maximum amount I can qualify for?” But then they step back and say, “I want to take a step down.”
When you probe them, more often than not, they say, “If one of us loses our job, we still want to keep our house.” It’s been very enlightening that they’re not trying to max out what they can buy, given what they qualify for.
Fogg: Buyers aren’t necessarily saying, “Just because prices have come down and interest rates are down, now is my time to move up.” They’re staying extremely conservative. They’re happy to be in the home they’re in because they don’t know what the future holds.
Doctors and private business owners are feeling uncertain about the future. Even if they can afford a home over $1 million, they aren’t buying one. There are 20 houses priced over $1 million in Alachua County. Since January, three of them have sold, and they all closed just under $1 million. In contrast, in 2010, we had 10 houses close over $1 million.
2. Do you see people remodeling instead of buying a bigger house?
McIntosh: There are some pretty significant remodelings going on. In general, our economy in this town is driven by the state budget, and there has been a lot of uncertainty in the state budget. When there is uncertainty, people tend to hunker down where they are until they feel a little more optimism or have a little more certainty.
There a lot of people who could be taking advantage of the low prices and interest rates who are choosing not to stretch.
3. How important is the influx of people moving here?
Fogg: With a few exceptions, they are the people who are buying. But I’ve lost sales to medical residents who were looking at other locations of a similar size, such as in North Carolina and Tennessee, because of our high property taxes. It’s not so much the principal and interest but the taxes that are added to that mortgage payment that hurt. It’s hard, because the taxes make the cost of living here look really expensive.
If people moving here have a home to sell where they’re coming from, they’re going to be renters. That scenario is making the rental market strong.
McIntosh: In the summer, there are folks who are getting job offers, and they have to find a place so they can be ready for school to start. Many of them are wanting to rent. In addition, we’ve had a couple of significant employers coming to town, and that’s starting to touch our market.