Has Jacksonville's Housing Market Gone to Investors? - Prospective buyers in the Jacksonville area have seen their local housing market go through a complete transition in just six months’ time. Last summer, this northern Florida city was definitely a buyer's market, but now there's a shortage of inventory – making it more of a seller’s market!
Why the drastic change?
The simple answer is increased competition – and not just from other “regular” buyers hoping to purchase a home. Instead, similar to what we’ve seen a few hours to the south in Miami, investment firms looking to take advantage of the real estate market here have swept in and purchased thousands of homes in the metropolitan Jacksonville area over the last few months.
For now, these investors are renting their new houses out, but the ultimate goal is to make a significant profit by selling these properties when they are worth more money in the future. Other plans include renovating the homes, then leasing them long-term.
Just how involved have investors become in this city, you ask? Perhaps more than you think!
American Home, an investment firm based in Malibu, California, is among the most active firms right now. One television station located in Jacksonville found 28 pages of transactions involving that company alone in Duval County court records! However, that doesn’t include the hundreds of pages of court documents involving other investment firms making similar purchases.
So, what does this mean for the local housing market?
On one hand, the investment groups are helping things recover in Florida’s largest city – a good thing, considering that the Sunshine State has been one of the slowest to recover in the country. Experts say they are revitalizing some communities because many of the homes they've purchased, and are now renting, have been vacant for long periods of time after the housing market's collapse in 2008. That raises the property value of those homes and the surrounding ones in the same neighborhood.
Higher demand causes bidding wars, so like many other cities across the country where investors are now involved in the real estate market, home prices in the Jacksonville area continue to rise. That's great news for sellers, but as you can imagine, prospective buyers don't like the battles, especially since they are usually on the losing end.
“Traditional” buyers, meaning those people who want to buy a home as their primary residence and not as an investment property, are losing out in the bidding wars because the investors have a lethal weapon – cash. Most “traditional” buyers usually have to take out a home loan, so while they're going through process of applying for a mortgage, the investors are swooping in and making cash-only purchases.
So, this situation is obviously frustrating for buyers here, but what makes matters worse is that the investors in Jacksonville don't seem to be in a hurry to re-sell the properties. They know that owning real estate in Florida has always been a hot commodity, so they're willing to wait until the housing market makes a full recovery before re-listing the homes.
So, instead of making quick renovations and flipping the homes, these investors are deciding to rent them out. That means many prospective buyers who had hoped to purchase a home now have to rent one, and it may be owned by the investor that beat them in a bidding war for another property!
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