Market trends for 2006

Real estate pros share their thoughts

January 7, 2006

By JILL ZEHLER, Special Sections writer

There is good news for Jacksonville's 2006 real estate market. Top local real estate company presidents and brokers are predicting a healthy market that will benefit both buyers and sellers.

To add hard numbers to the equation, FORTUNE magazine is reporting that Jacksonville ranked No. 2 out of the nation's top 100 metro areas in projected appreciation growth for 2006. Just below San Antonio's 8.3 percent projected growth, Jacksonville is projected to have 8.1 percent growth with the median home price projected at $164,700.

Those numbers mean exciting things are to come, said Mike Bugg, president of Lifestyles Realtors.

"I think we are going to continue to grow expeditiously," Bugg said. "I lived in Atlanta during the Olympics, and one year after the Olympics the city grew unbelievably, like at 100,000 people a month. I think we are going to see tremendous growth, and I think we are going to have a lot of corporate relocations because of all the events we have had here."

With a relatively affordable housing market, a high quality of life and a pro-business government, Linda Sherrer, president of Prudential Network Realty and 2005 Northeast Florida Association of Realtors President, also believes that corporate relocation in Jacksonville will continue to gain momentum. She points to the upcoming Merrill Lynch move as an example of how a company can relocate to Jacksonville and give a great quality of life to its employees.

As far as the slowdown or the bursting of the real estate bubble, Sherrer envisions what she calls a normalization process.

"I think where you have seen it at an almost frantic place, you will start to see a normalization," Sherrer said. "Perhaps homes are on the market a few days longer than they were before, but still, the prices are maintaining and holding and continuing to increase. It's a very healthy market for buyers and sellers."

According to data from the National Association of Realtors, the housing market for 2005 is headed for a fifth consecutive annual record, and sales activity in 2006 is expected to be the second best year in history. Additionally, NAR is projecting the 30-year fixed-rate mortgage to trend up modestly and reach 6.6 percent during the second half of 2006.

Ann McAfee, broker/owner of four RE/MAX Specialists locations, said that the strong seller's market we experienced in early 2005 will continue to weaken in 2006 and will turn into a very healthy buyer's market by fall. Continued rising interest rates will accelerate this process, she believes, and the ability to flip units will decline greatly, McAfee said.

"As the number of units available increases, demand will decrease, as will the likelihood of quick profits," McAfee said.

One of the trends that is catching on in Jacksonville and will continue to grow in 2006 is the affinity for urban living. Bugg said he's witnessed the trend in Atlanta, and envisions a huge influx of people moving into urban areas of Jacksonville such as downtown, Springfield, Riverside and Five Points.

Ed Forman, president of Watson Realty Corp., echoes this belief in renewed urban living.

"I really feel that downtown Jacksonville is emerging," Forman said. "It's going to be a huge benefit for Jacksonville."

Another lifestyle trend that Forman predicts will remain hot is home buyers' attention to quality finishes and prestige appliances. Kitchens and bathrooms will be showcase rooms with much emphasis on the details.

"I see lots of quality, lots of upgrades and top-of-the line fixtures and lighting," Forman said.

As director of builder sales and marketing for a division of Prudential Network Realty, Mary Anne Hashem can attest that high-end appliances from Bosch, Viking and Thermador are in great demand by home buyers. Overall, people want quality and comfort in their homes.

"I think people as a whole are spending more time at home," Hashem said. "Families with children, the Gen--Xers, are staying at home more with their children and want to be more comfortable at home. And virtual offices are keeping more people at home, and they want to be comfortable in their home."

The demand for waterfront property will continue in the First Coast, said Walter Williams Jr., President of Coldwell Banker Walter Williams Realty Inc. Teardowns of existing homes and the building of new ones in hot areas also will occur, including those located near the St. Johns River or near the Atlantic Ocean.

"People are looking for very desirable locations," Williams said. "I've seen it in places like Deerwood, San Marco and Avondale. People are doing teardowns because the price of lots can be considerable."

For the first-time home buyer or for those looking to downsize without giving up precious amenities, condominiums will continue to be a popular choice.

"They are selling so quickly, I can't fully explain it," Bugg said.

Sherrer said the lack of available land is one reason why condos are sprouting up in popular areas of Jacksonville near shopping, dining and business districts. Baby boomers also are interested in condos, and lastly, apartment complexes that are being converted to condos are allowing buyers to find a modestly priced property in what may have been a challenging location for them to afford to buy a home.

Overall, it seems local real estate pros are confident that Jacksonville's real estate market will continue to grow and remain healthy.

"I think that Jacksonville has certainly become a hot spot for investment opportunities," Forman said. "People from all over the world certainly have noticed Jacksonville to be a great place to buy real estate."