My Blog

Recent Economic Events and How They May Play Out in Our Local Real Estate Market

By Todd Gifford

Wow, it's been a crazy January thus far in regards to news in the media relating to our economy!  We've seen mostly negative news recently, but this week that all changed.  I believe that this week's turn of events will likely begin to change the market conditions in Northeast Florida and many other markets across the U.S.  There are still many real estate markets throughout the U.S. that are overpriced in regards to income levels, however Northeast Florida is generally affordable with median price ranges significantly below Florida state levels in most areas.

I have personally seen a significant increase in potential buyers over the last 2 months in this area, however many of them have been doing more looking than buying. But that's about to change in my opinion.  Many potential buyers have been anticipating further price declines, further interest rate cuts from the FED (and potentially lower mortgage rates), and people looking for Jumbo mortgages have been taken back by the perceived high rates in that segment of the lending market. 

But the Federal Reserve put a shot in the arm of our economy by lowering the federal funds rate by .75% in one day!  This was the deepest one-day cut in rates since 1984.  On top of that there is talk of another rate cut next week, and many expect it to be .5 %.  In addition, it appears that Congress is about to pass a stimulus package that will create mostly a psychological boost to the economy (in my opinion). Nevertheless it will help to spur positive changes in the economy.  The most exciting portion of that package for real estate is that they plan to increase the conforming loan limits to $700,000, up from $417,000.  This means that only those loans over 700K will be considered Jumbo!  This will REALLY help homebuyers looking to purchase homes up to 700K, and it could certainly help the areas at or near the beaches such as Vilano Beach, South Ponte Vedra Beach, Ponte Vedra Beach, etc.  This could easily translate into a 1% rate savings or more for many potential buyers in this area, depending on how this increase is structured.

There is so much more to talk about in regards to the government stimulus package, interest rates, the overall  economy, and the local prognosis for real estate.  But the bottom line at this time is that buyers are not likely to see further significant price declines in the near term in this area (with the exception of reductions to homes that are already overpriced in comparison to others), and interest rates are phenomenal.  We should see more activity in our market this year, however only time will tell!

Feel free to call or e-mail me anytime if you have questions about buying or selling real estate!

Copyright © 2008 Todd Gifford