JACKSONVILLE, Fla. – Federal Reserve economists have issued a worrying alert to millions of potential homebuyers, warning that the housing market is showing signs of a brewing US housing bubble.
But experts who News4JAX spoke to say the bubble won’t burst like the 2008 recession, especially in growing cities like Jacksonville — which may instead continue to experience a crisis in home and rent affordability.
As home prices in Northeast Florida continue to rise, some buyers are so desperate they are willing to forego a home inspection.
It’s these rising prices that economists at the Federal Reserve Bank of Dallas say are failing to keep up with the rest of the housing market and could lead to the bubble bursting.
But according to real estate experts, unlike a decade and a half ago, Florida has limited inventory versus an oversupply of homes — which will lead to a protracted affordability crisis, according to Florida Atlantic University real estate economist Ken Johnson.
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“I think what we’re going to talk about that bubble, if you will, and I’m using that term to emphasize that there’s going to be some pain associated with that,” Johnson said. “And instead of seeing prices plummet, I think maybe the Fed is a little off, at least for Jacksonville.”
Johnson says home prices could eventually plummet in other metro areas like Memphis, Tennessee and Detroit, Michigan — cities where he says the population just isn’t growing. But that’s certainly not the case in Northeast Florida as more and more people flock to the Sunshine State.
“Too often people interpret the word ‘bubble bust,’ which is exactly what happened in 2008,” said Mark Rosener, president of the Northeast Florida Association of Realtors. “And I really don’t see any signs of that happening.”
Rosener anticipates a more normal selling season in the coming summer and fall months, pointing to the equity homeowners have gained during this late-breaking seller’s market.
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“Today, as Americans, we have more equity in our homes than ever before — all-time highs. What happened last time was more of a banking industry failure and people pushed themselves beyond their means. And the offer was much higher than today. And there was no equity in their homes. That makes a difference,” said Rosener.
Homes in North Florida are selling for 37% more than they should, according to real estate experts. They say the long-term effects we will feel in the Jacksonville area will be continued high home prices and maybe even higher rents.
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