If you are an investor in the real estate market and are curious about what is happening in the Jacksonville real estate market, you are in the right place. In today’s episode of the Not Your Average Investor Show, Gregg Cohen, Co-Founder of JWB Real Estate Capital, shared the results from the last quarter of the year.
Here’s what we discussed:
- What is MOI, and what does it say prices will do over the next 6-12 months in Jacksonville?
- Where Jacksonville’s home pricing is currently and how that compares to historical averages
- Why investing in single-family rental properties makes sense no matter what happens to short-term home prices
- Why $30 billion has come to the single-family rental space in the last 18 months, and why more is on the way.
If you want to learn more about how you can take advantage of the Jacksonville real estate market, listen to the full podcast so you can absorb all of the details Gregg shared.
JWB is known for offering single-family homes to real estate investors who desire passive income. Based in Jacksonville, Florida, JWB has tracked market data within the Jacksonville real estate market and across the United States. Since 2012, Jacksonville home prices have been steadily increasing.
While interest rates have remained low, 2021 has been a great year to buy real estate in the Jacksonville region. The Jacksonville housing market shows high demand since many people move into Florida due to their companies moving into the area or working remotely. With information deemed reliable from multiple listing services, building projects, and the Chamber of Commerce data, we are finding huge growth in Northeast Florida.
What is happening in the real estate market?
We have an extreme lack of supply and heightened demand. That started in 2020 and created rapid-hot fire home price appreciation within one year. Things don’t change overnight in Jacksonville real estate, and the lack of supply is not solved overnight. We still have heightened demand. What we are seeing is a slight softening of that ridiculously hot-fire home price appreciation. But as we advance into 2022, the same concept will continue because we still need to build houses, and home prices will continue to rise.
The median home sold price is what you want to look at because it’s a better way to see the strength of the market. This also plays into the appreciation rate. What you see in this chart are record-breaking figures showing the strength of the real estate market in Jacksonville.
Looking at what happened in September each year for three years, you see hot-fire growth with houses on the market for a shorter time, higher home prices up 15% – 20% each year, and increasing appreciation. This shows a scorching hot Jacksonville real estate market!
The higher demand of people wanting to move into Jacksonville and lower interest rates created a huge demand for housing in Jacksonville. Even Jacksonville locals decided to jump into homeownership because they understood that investing in hard assets like single-family homes would help their financial returns over the long run.
This real estate market is among the fastest-growing in the country, and we do not see this demand for housing stop anytime soon. Today, your Return On Investment is performing well if you have invested and continue to invest in turnkey, single-family rental properties.
What about the housing months of inventory?
The demand for housing is so great that it has made our months of housing inventory go down. That is why JWB feels confident that you will see great returns when you add rental properties to your investment portfolio.
The chart above shows that demand remains high, which means that prices will remain stable. In 2021, we don’t even have two months of housing inventory in the Jacksonville real estate market. This chart shows that housing prices will continue to go up since the inventory remains low. We do not see home prices decline until the Jacksonville real estate market has more than 6 – 18 months of inventory.
This is a very different market from what we saw in the Great Recession of 2007 – 2012, where the real estate market hit bottom. For anyone who buys rental properties in Jacksonville and holds onto those properties for a full market cycle of 10 – 20 years, we are very confident you will see an excellent Return On Investment.
Should you wait to buy a house when prices drop?
Gregg went into great detail about his opinion on this, so listen to the full episode of the Not Your Average Investor Show to hear everything. But this graph shows how the Jacksonville real estate market has been performing, and we are still below the projected home prices.
If this works the way it has been historically, you will see that the average home appreciation rate will come back down to normal. However, this does not mean a crash is coming. Home prices are not going to decline. What this means is that you see “lower than normal” home price appreciation to get you back to a median sales prices, and that is what you see in market cycles.
Long term, what is most likely to happen is lower home price appreciation, and we are going to monitor it. But lean into this data and understand that just because you are above the trend line does not mean you are going to lose later. What we are looking at is a long-term pricing indicator over 20 years.
If this works the way it has been historically, you will see that the average home appreciation rate will come back down to normal. However, this does not mean a crash is coming. Home prices are not going to decline. This means that you see “lower than normal” home price appreciation to get you back to a median sales price, which you see in market cycles.
Long term, what is most likely to happen is lower home price appreciation, and we are going to monitor it. But lean into this data and understand that just because you are above the trend line does not mean you will lose later. What we are looking at is a long-term pricing indicator over 20 years.
How is the world different today than it was in 2019?
Florida is a business-friendly climate. Since COVID, many people and businesses chose to move to warmer climates, work remotely, and live where it is more affordable. Jacksonville has become an area of huge growth because it is such a desirable and affordable metro area.
Gregg continued to share data points and if you want to hear all that he has to say about appreciation in the Jacksonville real estate market, listen to this full NYAI episode.
What is the worst-case scenario when investing in Jacksonville real estate?
Gregg and his JWB partners bought rental properties in the “worst” time, and they came out okay. This chart is the proof. Gregg owned 40 properties in 2006, and then the market crashed.
Even though the real estate market crashed, this chart showed that the prices of homes almost doubled in 20 years! Even if you bought at the absolute wrong time in Jacksonville, like Gregg, you still would have enjoyed nearly 3% home price appreciation year after year.
So, did real estate investors lose when they bought and held for a full market cycle? No. They did just fine. That is why long-term rental property investments are the way to go. Gregg has lived it, and that is why he has great insight that many other investors do not have in the Jacksonville real estate market.
We are showing “worst-case scenario” data, and we still came out okay. If you stick to the plan of holding onto your Jacksonville rental properties for the long term, we are confident you will come out ahead.
Will rents continue to go up?
Yes, we see that rents will continue to increase over the long term as well. We recently raised rents by 8% because of the incredible gains in this local market. We continue to see increased population growth, and there is high demand for rental properties. We do not foresee rents going down in this real estate market anytime soon.
How does the global construction supply shortage affect JWB’s construction of properties?
The shortages in labor and materials are real. It’s taking longer and costing more to build. However, JWB is absorbing the brunt of those lumber surcharges and other issues. Our investors do not have to deal with the labor and building supply shortages. When you put a house under contract, it may be 5-6 months before it’s built, but a renovated home can close sooner in 1-2 months.
Our previous guest, John Burns, gave helpful information about preparing for shortages ahead of time. We listened to his advice, and JWB has started to prepare accordingly to minimize the impact on our investors. Listen to that episode here on podcast or read the article we created from that episode here.
How does JWB solve the potential cash flow issue for new sales?
If we expect home prices and interest rates to go up, we don’t see rent prices keeping up with the pace. That means your cash flows get crunched, and that’s a real thing.
We don’t know when that will come into play. Positive cash flow “isn’t a right.” We spent many days finding properties that were positive cash flow. It’s not always going to happen. The good news is that this asset class is so much more attractive than other asset classes that it can afford to be less attractive for a short period.
We are doing everything we can at JWB to preserve cash flows. We are committed to having your residents stay as long as possible to decrease maintenance fees and turnover. We also rolled out our septic warranty program that reduces the investors’ costs. Cash flows are going down, but the rental properties still pay for themselves in the long term.
Will JWB be around for another 20 years?
Yes, we expect to be continuing for many, many years. JWB’s business model is continuing to grow. JWB is preparing the business to withstand the changes in the Jacksonville real estate market. Even when you see cash flow go down, turnkey rental properties will remain strong. JWB will be here, and we will still be fine if we continue to serve our clients well with terrific rental property management.
This chart shows our JWB company update:
Here’s what we are doing. When we see data, we shift to meet the needs of the market. Currently, we see we are above the trendline, and we are still buying properties and building houses to meet inventory needs. As a result, we are seeing a massive jump in turnkey property sales. We are sticking to our truth, and we see that larger, nationwide, “big guy” developers are doing the same things we are doing.
Who are the “big guys” compared to JWB?
Pacific Life Insurance is buying and building 5000 new rental properties. JPMorgan Chase and American Homes are jumping into this market as well. This slide is hard to read, but it shows where big money is and what they are investing in. Here are the headlines talking about these large investment firms.
Why are all of these large investors getting into the real estate market? This slide explains why they are gobbling up as many rental properties as possible.
They jumped into the mix when big money saw that the data supported investing in building more rental properties. The advantage JWB has is that we have been here in the Jacksonville market this whole time, and we have the home-court advantage. We are already doing and have been for 15 years, whereas the big money investors are just getting started. JWB doesn’t have any waiting lists, and our Not Your Average Investors have no restrictions.
What does the future look like for the Jacksonville real estate market?
One year ago, Gregg said this was the best time to invest in real estate. The numbers have supported that claim, and he continues to be confident in that statement for the coming year. When you finally decide to invest your money into turnkey rental properties, a waiting list will decrease your returns as those prices go up the longer it takes.
Here’s another advantage JWB has over the competitors who are gobbling up land and building homes. We have a local advantage. Our vertical integration within Downtown Jacksonville is attracting more people to move here. We have an excellent property management team, and we do everything possible to create the best returns for our investors.
JWB believes in under-promising and over-delivering. Our community of investors has grown because we have stood by our truth all of these years. We are confident that those who invest in this market and hold onto their properties for a full market cycle will be well on their way to financial freedom.
What is JWB thankful for this Thanksgiving Holiday?
Gregg shared sincere thanks to the community for celebrating his 39th birthday with him today and expressed excitement over how our online community is hosting meetups to gather together in person. Our Not Your Average Investor community is wonderful, and JWB appreciates the hour everyone takes out of their day to spend with us here on the show. Happy Thanksgiving, everyone!
How Do I Find Out More About Investing In Turnkey Rentals With JWB?
Contact the JWB team to begin the discussion. If you want to invest in Jacksonville real estate, now is a great time to jump in. Go to www.ChatWithJWB.com and find out how we can help you reach your financial goals through turnkey single-family rental homes.
If you want to become part of the JWB online community, join us in the JWB Facebook Group at https://www.facebook.com/CashFlowProperties.
You can also go to www.JWBInventory.com to see what properties are currently available. We encourage you to contact the JWB team for a consultation to determine how our turnkey rental properties can deliver positive passive cash flow.
We invite you to watch this episode of the Not Your Average Investor Show in its entirety because Gregg Cohen shared some high-level concepts about the Q4 2021 real estate market. Fortunately, Jacksonville real estate continues to be an excellent return for real estate investors.
To Your Success,