Gainesville Housing Market Conditions Favor… Renters

Market conditions are tipping toward renting instead of buying for many would-be home buyers, Gainesville housing market observers say.

That is especially true in the condo market, with many struggling condo conversions going back to yearly rental leases.

Former condos are now leasing to cover their Florida mortgages because there are so many condos on the market, said Steve Elwood, senior vice president with Coldwell Banker/M.M. Parrish Realtors.

Mitch Glaeser, broker for The Palms, said new condos tend to do a lot better than conversions in the Gainesville market.

A well-conceived condo conversion would still do well, however, according to Wayne Archer, director of the University of Florida’s Bergstrom Center for Real Estate Studies.

“The problem with a lot of conversions is they’re not unique,” he said.

While The Palms is downtown and has four levels, “All the conversions are garden apartments out in the perimeter areas, one or two floors. They’ve got more competition from the rental market.”

Factors that favor renting include rising Florida mortgage rates, sellers holding out for higher prices and more restrictive loans.

Gainesville also has a lot of short-term residents with the University of Florida, making closing costs too hard to recoup through appreciation.

On the other hand, Florida home loans, while on the rise, are still low and median values for homes and condos are on the rise in Gainesville.

That Florida mortgage trend strongly bucks both state and national trends and makes real estate a better investment than renting.

May sales of existing single-family homes in the Gainesville area fell 10 percent from a year ago, but the median sales price was up 6 percent to $219,100.

The Gainesville Metropolitan Statistical Area, as used in this study, consists of Alachua County and Gilchrist County.

Florida home sales were down 34 percent in the same period while the median sales price was down 5 percent to $237,000.

Existing condo sales were down 41 percent in Gainesville, while the median sales price was up 9 percent to $148,000. Florida condo sales were down 28 percent and the median price down 4 percent to $202,500.

While local sales are down, Florida Realtors attribute rising median prices to low availability of lower-end homes and sellers willing to hold out for better prices.

• The metro area’s MLS included 1,724 single-family homes on the market as of Monday, with 185 total sales from May 1-25.
• At that rate, the current listings include about eight months worth of inventory. Another 398 sales were pending.

SOURCE: Gainesville Sun