First Time Home Buyer Guide in Jacksonville
a guide for first time home buyer
Jacksonville, FL
featuring guidance from Ben Glynn
WELCOME TO JACKSONVILLE
Jacksonville, the most populated city in the state and the largest city in terms of area in the contiguous United States as of 2020, is a metropolis on the Atlantic coast of northeast Florida.One of the nicest places to live in Florida is Jacksonville, which provides inhabitants with a suburban atmosphere. There are many restaurants, parks, and other things to do in this safe city.
VALUABLE GUIDANCE FOR HOME BUYERS
Trends in the Jacksonville Real Estate Market
Our local market is still very strong. We have lots of people continuing to move to Florida and many first time home buyers that are looking for housing. There is also a significant inventory shortage in our state. In fact, there was a study that was just published today that states Florida will need an additional 570,000 housing units (apartments, homes, town homes, etc) by 2030. Trends we are seeing in our market is prices starting to stabilize after the past two years of unsustainable increases. Prices are leveling off and we are predicting a more normal market with increases of value in the 3-6% range year over year. Interest rates have increased as well – current rates are in the 6 to 6.5 range, but those are also predicted to drop in the next 12-18 months – per lenders and financial experts. There are a lot more rate buy down opportunities being offered in the short term. The most popular is the “2-1 buydown” which buys down the rate 2 points in the first year of the loan and 1 point in the second year. On the third year of the loan, the price reverts back to what the rates were at the start of the loan. An example would look like this: Current rate is 6.5% – client has a 2-1 buydown. First year their interest rate is 4.5% Second year their interest rate is 5.5% Third year interest rate, and subsequent years, is 6.5% At any time, the client could refinance and lock in a lower rate if the rate drops. If it doesn’t, they are locked in at the original rate. Houses are also staying on the market for a more “standard” period of time. In St Johns county the average days of market is 45, compared to about 25 just a few months ago.
Our local market is still very strong. We have lots of people continuing to move to Florida and many first time home buyers that are looking for housing. There is also a significant inventory shortage in our state. In fact, there was a study that was just published today that states Florida will need an additional 570,000 housing units (apartments, homes, town homes, etc) by 2030. Trends we are seeing in our market is prices starting to stabilize after the past two years of unsustainable increases. Prices are leveling off and we are predicting a more normal market with increases of value in the 3-6% range year over year. Interest rates have increased as well – current rates are in the 6 to 6.5 range, but those are also predicted to drop in the next 12-18 months – per lenders and financial experts. There are a lot more rate buy down opportunities being offered in the short term. The most popular is the “2-1 buydown” which buys down the rate 2 points in the first year of the loan and 1 point in the second year. On the third year of the loan, the price reverts back to what the rates were at the start of the loan. An example would look like this: Current rate is 6.5% – client has a 2-1 buydown. First year their interest rate is 4.5% Second year their interest rate is 5.5% Third year interest rate, and subsequent years, is 6.5% At any time, the client could refinance and lock in a lower rate if the rate drops. If it doesn’t, they are locked in at the original rate. Houses are also staying on the market for a more “standard” period of time. In St Johns county the average days of market is 45, compared to about 25 just a few months ago.
Tips for First Time Home Buyers in Jacksonville
CDD fees are never truly paid off. Often times, people will misunderstand this and advertise a home with the CDD fees paid off. That is not accurate as the fees is broken down into two pieces – the bond itself and the operations and maintenance portion. The bond can be paid off, but the operations and maintenance portion can not and will always be a part of your fees.
In our region there are fees in many subdivisions that people aren’t aware of called CDD fees. CDD stands for Community Development District and relates to the amenities that the developer includes in the subdivision. This can include things like swimming pools, fitness center, tennis courts, etc. When a developer is building the subdivision, they take out a municipal bond to pay for those amenities. The cost of that bond gets passed on to the owners of the property as a CDD fee. This fee is included in your taxes, so it can be a write off, but it can be several hundred dollars per month.
CDD fees are never truly paid off. Often times, people will misunderstand this and advertise a home with the CDD fees paid off. That is not accurate as the fees is broken down into two pieces – the bond itself and the operations and maintenance portion. The bond can be paid off, but the operations and maintenance portion can not and will always be a part of your fees.
When looking at buying your first property, don’t look at the target purchase price, look at your target monthly payment as this is much more important. For example, if you want your monthly payment to be 2000 per month, you have to make sure you are factoring in things like CDD fees or home owners association fees into the payment. If you buy a house that doesn’t have those fees, you could afford a house with a higher purchase price because your monthly payment wouldn’t include those fees.
Make sure you work with an experienced, single agent. There are a lot of realtors in Jacksonville. Over 11,000 licensed agents in Northeast Florida alone. However, most of those agents have never done any business. In 2021, out of the 11,000 agents that are licensed, less than 3,000 did a single transaction. Most people in this area know a realtor – or several! The important thing to find out is how much experience they have and how many people they have helped. This is going to be one of, if not the largest transactions you have ever made. It is critical you have someone with experience to guide you through this process.
In Florida, unlike most states, the default category for realtors is a transactional agents. What this means is they are working for the transaction – to make sure the deal goes together. They are not working for one side or the other, almost like a referee who is just trying to keep things moving along. Most people want an agent that is working for them, on their behalf. In order to truly have that kind of representation, you need to work with a single agent. As a single agent, they owe you loyalty, and confidentiality and have a fiduciary responsibility to you. They are looking out for your best interest and trying to get you the best deal – not just get the transaction completed.
Florida offers a homestead exemption for your primary residence. This exemption provides significant property tax savings and limits the amount your assessed value can increase each year while you own the property. New property owners must file by the deadline on March 1st in order to receive these benefits.
Make sure you work with an experienced, single agent. There are a lot of realtors in Jacksonville. Over 11,000 licensed agents in Northeast Florida alone. However, most of those agents have never done any business. In 2021, out of the 11,000 agents that are licensed, less than 3,000 did a single transaction. Most people in this area know a realtor – or several! The important thing to find out is how much experience they have and how many people they have helped. This is going to be one of, if not the largest transactions you have ever made. It is critical you have someone with experience to guide you through this process.
Florida offers a homestead exemption for your primary residence. This exemption provides significant property tax savings and limits the amount your assessed value can increase each year while you own the property. New property owners must file by the deadline on March 1st in order to receive these benefits.
In our region there are fees in many subdivisions that people aren’t aware of called CDD fees. CDD stands for Community Development District and relates to the amenities that the developer includes in the subdivision. This can include things like swimming pools, fitness center, tennis courts, etc. When a developer is building the subdivision, they take out a municipal bond to pay for those amenities. The cost of that bond gets passed on to the owners of the property as a CDD fee. This fee is included in your taxes, so it can be a write off, but it can be several hundred dollars per month.
When looking at buying your first property, don’t look at the target purchase price, look at your target monthly payment as this is much more important. For example, if you want your monthly payment to be 2000 per month, you have to make sure you are factoring in things like CDD fees or home owners association fees into the payment. If you buy a house that doesn’t have those fees, you could afford a house with a higher purchase price because your monthly payment wouldn’t include those fees.
In Florida, unlike most states, the default category for realtors is a transactional agents. What this means is they are working for the transaction – to make sure the deal goes together. They are not working for one side or the other, almost like a referee who is just trying to keep things moving along. Most people want an agent that is working for them, on their behalf. In order to truly have that kind of representation, you need to work with a single agent. As a single agent, they owe you loyalty, and confidentiality and have a fiduciary responsibility to you. They are looking out for your best interest and trying to get you the best deal – not just get the transaction completed.
