Helping our buyers look around the Jacksonville area for condos has become quite interesting these days. Buyers are getting excited when they see that condo complex they have had their eyes on for a few years has fallen below their range of what they can afford.
It is very common for Jacksonville condo prices to have dropped 50% since 2006/2007. Surprisingly, I am seeing some condos in the Southside area of Jacksonville, St Johns County and Clay County priced around 25% of what they last sold for just a few short years ago!
Here are a few of the factors wreaking havoc on our Jacksonville condo values in the Jacksonville Real Estate Market:
Jacksonville foreclosures in condo complexes. Once Jacksonville foreclosures have entered a condo complex...expect values to start plummeting. Rather than pricing the condo at market value...we see many new Jacksonville condo foreclosures come on for a good deal less than fair market value.
Hardship situations making it hard, or impossible, for some (many???) residents to pay their condo dues. When this happens, rather than dramatically slashing expenses to make it easier for the remaining residents, it seems that they are simply dividing the expenses by the number of people who are paying their dues still. This in turn forces more people to not be able to pay their dues. We think everyone would benefit by cutting condo dues, rather than raising them which will continue to add to hardship situations. If you are buying a Jacksonville condo...remember one thing. Go ahead and plan and budget for the dues to go up!!! These condo fees are not set in stone, and we are of the opinion that we are nowhere near the point where they will level off. We also question whether they will ever voluntarily bring these dues back down even after the housing situation and the economy improves to the point where we are no longer seeing defaults above the historic average.
It has become impossible to get loans in many Jacksonville condo complexes! Many buyers do not realize this! If you are looking to purchase a home in a Jacksonville condo complex it is crucial that you are working with a fantastic lender who can quickly evaluate whether a loan can be completed on a particular home. FHA has an approved condo list. Fannie has condo guidelines. Everywhere you look there are new guidelines popping up making it harder, or even impossible, to purchase that condo. Recently we saw a case where a lender that the buyer was already working with when they first came to us did not prequalify the complex. The transaction progressed with everyone believing the closing was fast approaching. The week of closing USAA came back and said that the condo was not eligible for financing. Why? There were too many delinquent homeowner accounts. There were too many people unable to pay the high condo association dues. Here is the really interesting part....this was a Fannie Mae guideline that held this closing up. We would venture a guess that many, many of these condos were purchased with loans that are now held by Fannie Mae. How is Fannie helping anything with guidelines that are going to wreck the values further and force more homeowners into foreclosure? They clearly are not thinking through cause and effect. On this particular condo the short sale approval became useless without the ability to obtain financing on this unit. So we submitted a new contract for this same property at 36% less than what the buyer had previously been willing to pay (and it had appraised for). The seller had purchased the home brand new in Oakleaf for the $180k range just three years ago. Our current contract price that is pending short sale approval is only 25% of the price he paid for the home. It's a beautiful condo...almost brand new!!! But now the complex has to be priced for cash buyers since financing is out of the questions. Great job Fannie! Way to think things through! When three years ago I could hardly find a buyer a nice condo for $150,000...today I can help you get an oceanfront condo complex for that range!Condo conversion (and other?) lawsuits. This issue has also been somewhat of a problem. There have been different condos that have gone through phases of not being "loanable" nor "insurable" for title insurance purposes. There is one particular complex that I would call fantastic. It's awesome. I have always loved it. PERFECT location easily accessible to 9A, Town Center, I-95...fabulous floor plans. Great site planning (not just rows and rows of units facing each other). Huge windows with tons of light. These condos feel more like a home than any other complex I've ever been in. What can you buy these for today? Banks are selling their foreclosures in here for around 25% of what the people who were foreclosed upon paid for the units. Condo dues have also gone very high since there is a lawsuit pending against the builder / developer. The lawsuit issue dealing with construction problems have sent values plummeting. When the owners can no longer afford to keep their home in here they have no choice but to short sale or to let their home foreclose. If they had 75% to cover the difference in the loss of value, they probably would not have financed in the first place.
Condo Fees/ HOA Dues/ CDD Fees combined on units...or some combination of this. The bottom line is that condo fees have gone higher. With fewer people paying, the budget has to be divided up. In the boom times, buyers did not care about the fees. Fees were lower and no one anticipated what would happen to the market. Some condo complexes have both Condo Fees and HOA Fees. But did you know that some have Condo Fees, HOA Fees AND CDD Fees? All of which have gone up due to the number of hardships being seen in the neighborhood. I ran a scenarios for a condo buyer the other day for a Northern St. Johns County condo complex. I quickly determined that although we can get him that condo for 25-30% of the price it was back in 2006/2007...all of the fees combined are equivalent to the principal and interest on a $150,000 house payment at 5% for 30 years!!!! So if you pay all cash, it's kind of like that cash being a "downpayment" and monthly payments as if you had gotten a $150k loan. Crazy???? We think!!!!
If you are a potential Jacksonville condo buyer, this is not a bad time to buy. Can the market still decrease. Yes, and we think it's not unlikely. But when the homes are already priced at only 25% of what they were in recent years how much do you stand to lose? At the same time, you need to be aware of what you are buying going in. Be aware of the fee situation. Find out if there are any lawsuits going on. Understand that even if there are no lawsuits and the fees are just fine...THIS COULD CHANGE ON A DIME. Be cautious of anyone who makes general statements. Do your research. Let us know if we can help. We are very experienced in Jacksonville distressed properties and regularly help buyers purchase Jacksonville short sales and foreclosures. We also help distressed sellers sell their homes through Jacksonville short sales.
