In Jacksonville Housing Market, Builders/Developers Hand Out Incentives

Builders in Jacksonville are faced with the same dilemma as many others around the state: how we do encourage Florida mortgage loan applications? The answer is similar throughout the regions:

By offering incentives.

Most are cash related, such as zero down and no closing costs at the Colony at San Jose; up to $78,000 off the sale of Mattamy Homes products; and no homeowner association fees for one year at the Palms of Amelia, according to the Northeast Florida Builders Association.

“A year ago these same builders wouldn’t have even considered that; they didn’t need to,” NEFBA past president and Brylen Homes Ltd. President Bryan Lendry said.

But this year is different. Some builders are adding extras such as a 42-inch plasma screen TV and an entertainment center with the purchase of condominiums at OakLeaf Plantation or a Vespa scooter with a purchase in Chelsea Lofts.

The push for Florida home mortgages

Robin Hurst, senior director of sales at Lifestyles Realtors, said that although cash-related incentives for homes in the lower price range could make or break a deal, the plasma screen TVs and the Vespas won’t be the deciding factor for those buying in the higher price range.

The Florida Association of Realtors’ most recent Florida Sales Report indicates that the Jacksonville housing market, like the rest of the state, is continuing its downward real estate spiral.

In August, 1,368 existing single-family homes were sold, which is down 19 percent from the same period last year, while the median sale price rose by 4 percent. Likewise, 142 existing condominiums were sold in August, down 45 percent from the 260 sold last August and sale prices were down 4 percent. These numbers did not include home sales in St. Johns County.

“The market was running 90 mph; now it’s running much slower,” said Ray Rodriguez, a real estate analyst and president of the Real Estate Strategy Center of North Florida Inc. in Jacksonville.

He said it will take months for the market to recover after years of low Florida mortgage rates, low construction-material costs and record-breaking population growth that sparked a speculative builder market in 2004 and 2005 when homes and residential developments were built before buyers were secured.

Homeowners profited in the short run, too, he said, by choosing nontraditional Florida home mortgage products and flipping, or buying and selling homes in a short time span to make a profit. The market became inundated with speculative homes, while the average price continued to rise. The median sale price for a single-family house in Jacksonville has almost doubled in six years, increasing from $106,100 in August 2000 to $202,300 in August 2006.

Housing slowdown: The beginning

Housing began to slow after Hurricane Katrina devastated the Gulf Coast last August, Rodriguez said, when construction material costs went through the roof and the rehabilitation of that area caused a construction work force shortage in Florida.

Since the beginning of 2006 both Realtors and builders have reported a decline in sales and lower-than-projected earnings. But Linda Sherrer, president and CEO of Prudential Network Realty of Northeast Florida, isn’t worried about the downturn.

“People feel like we were in a time that was not real; it was euphoric,” Sherrer said of 2005. “The minute anything changes or minimizes, it’s the sky-is-falling concept.”

Agents at Lifestyles Realtors are undergoing special training, said Carmen Edwards, vice president of retail sales, to ensure that homes are sold at the correct price points and lower-income borrowers can afford a Florida home loan.

Some developers are changing their marketing strategies, too. D.R. Horton Co. is marketing beyond Jacksonville in search of prospective buyers, said George Swisher, president of the marketing firm SwisherBurgos, and using a more grass-roots approach to marketing that includes blogs.

Meanwhile, a handful of agents are heading overseas; anything to find buyers that can afford a Florida home mortgage loan and propel the market to recent standards.