Northeast Florida has seen some serious interest in the past year, raising the average sale price enough to cause speculation — especially as rumors of a recession swirl around. But housing bubbles aren't necessarily easy to predict. If they were, no one would ever buy at their height on purpose! We'll look at the state of the market in this region, and how it's likely to impact future swings.
Prices & Salaries
One of the biggest signs of a bubble is the discrepancy between average salaries and average home prices. Unless a major company has announced an imminent move to the area (explaining the disparity), the bubble is likely to burst sooner than later. If you look at the numbers across the state of Florida, this doesn't appear to be occurring though. In fact, there's been a hike in wages in key regions in the state, a strong contributor to a stable market.
Mortgage Rates
The low rates in Florida are another reason why home prices have gone up. This can be frustrating for homebuyers because it can feel like what they're saving in interest, they make up for in principle. But the real cause for concern is when loans are handed out to nearly every applicant, regardless of income or assets. Thankfully, there does seem to have been some learning curve between Florida and the Great Recession though, as this does not appear to be the case.
Unstable interest rates are another major red flag, which again, haven't been a concern for those in Northeast Florida. Interest rates reflect everything from who's paying their property taxes to who's defaulting though, so it pays for all owners (and potential owners) to watch the rates as 2020 progresses.
Foreign Buyers Stop Buying
When out-of-state or out-of-country buyers start ignoring the property in an area, it could be a sign that they're seeing the big picture in a way that locals aren't. The same goes for tourism rates in any given area. This warning sign is worth taking seriously considering there has been a decrease in interest from foreign buyers in Florida. However, this has largely been attributed to the weakening of the US dollar as opposed to any specific problems in Northeast Florida.
It seems clear that buyers in Northeast Florida should exercise some degree of caution, especially as the popularity in certain areas attracts more investors and developers to the stage. But the truth is that the market in this section of the state seems built on something far more solid than a bubble.
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