The Gainesville area residential market is in flux. Sales have rebounded in the past year. Many new homes are smaller — and on smaller lots — than ones built in the past, although the new homes often offer more features such as granite countertops and high energy efficiency as standard features.
HOME: Living in the Heart of Florida asked real estate professionals to discuss trends they are seeing in the area. The discussion provides information for both buyers and sellers, and it also provides an overview of where the market has been and where it’s going.
The panel included:
- Thomas McIntosh, president of Berkshire Hathaway HomeServices Trend Realty
- Lauretta Fogg, an agent with Coldwell Banker M.M. Parrish Realtors
- Ken Cornell, senior vice president of Bosshardt Realty Services
- Gia Arvin, an agent with Matchmaker Realty of Alachua County
What kind of good buys exist in today’s market?
McIntosh: The whole town’s on sale. The whole town is still a great value.
Fogg: Prices have never been better (relative to income), and they’ll probably continue to stay there. There are good values for buyers with older homes that need to be updated. I think homes that linger on the market and don’t get their best price are ones that the sellers haven’t updated.
When I moved here 16 years ago, the first thing I noticed is that many people here don’t upgrade their homes. They get into them and then kind of let them go as far as decorating. They think if it was good in 1990, it’s good in 2014. Older homes that haven’t been updated are selling for $75 to $100 a square foot, which is dirt-cheap.
Arvin: Buyers can get great values if they’re willing to do their own remodeling. I have buyers at the price point from $150,000 to $180,000 who want a lot of square footage. I tell them: “You’re going to have to get something that’s not updated, and you’re going to have to be open-minded about that.” They can get awesome deals.
McIntosh: A lot of times you can get a bigger lot with an older home than what you can get in new construction. You often get nicer locations that are closer in to town. The tradeoff is you get an older house, but you may get something that is in a really desirable spot.
Cornell: Huntington is a great example. I have a house in Huntington with a pool that needs some updating, and it’s under $300,000. If it were new in Huntington, it would be $400,000. Someone has to be willing to say, “I’ll redo the kitchen, and I’ll redo the pool, and I’ll redo the master bathroom.”
Fogg: Schools are always the first determining factor of whether you’re going to have good values in your neighborhood. Suburban Heights has been very hot this year. Great location, well-built, solid block homes and great schools. People are recognizing that.
McIntosh: Part of the problem is cash is king. If you’re a cash buyer, you can get an incredible deal. If you’re a buyer who’s going to use leverage, you probably won’t have reserve money to be able to remodel.
Are people using rehab loans?
McIntosh: There’s still the FHA 203k rehab loan, but they’re limited to FHA guidelines, which only cover homes up to about $272,000.
Arvin: A couple of banks do in-house rehab loans, but they’re at a little bit higher interest rate.
How does the transient nature of the community affect the real estate market?
Fogg: A lot of folks move here knowing that they’re here for a three- to five- year stint at either the hospitals or the university. It takes you a year to move into a house and figure out what you want to do. Then, it takes you a year — with the way the construction trades are here — to find someone to do the work. Those people are not willing to take half the time they’re living here to fix up a house.
Cornell: They’d rather pay a premium for a rehabded house because they know they can resell in a good location in three to five years.
From the sellers’ perspective, are they going to get a return on that $20,000 or more that they invest in upgrades?
McIntosh: The real question is: If you don’t do the upgrades, is your house going to sell? The buyers are looking at the house, and they’re saying: “I don’t want a project; I want to live in it and enjoy it. I can go next door where the owner has done those upgrades.”
Cornell: You’re going to get the most for your house when two people are interested, and two people are going to be interested in about the first 30 to 60 days. And then after that, it’s a game. If you’re going to move in the next three years, and you need a new roof and a new air conditioner, will you get that investment back? I say, yes. You must make that investment in order to get top dollar in the future.
Arvin: It’s either a beauty contest or a price war. You’re either on one side, or you’re on the other. So, you have either got to make it the best house in that price range or you’ve got to be the lowest price. You’re one or the other; pick what you’re going to be.
“It’s either a beauty contest or a price war. You’re one or the other; pick what you’re going to be.”
Fogg: If you don’t upgrade, you will always be the bridesmaid and never be the bride.