As economic and stock market conditions become increasingly volatile, it can be easy to get caught up in the noise. However, we should take a step back and look at current real estate data for Jacksonville through a lens with perspective.
While there are plenty of negative narratives about investing in real estate, it’s important to separate truth from conjecture to make an educated decision for your investing future. Doing so will fully inform you on market conditions and help you be confident in your decisions.
Let’s get into it.
Exploring the data to make better decisions
When it comes to real estate investing, it’s important to look at the data as it plays out historically.
Home prices in Jacksonville have historically experienced seasonal fluctuations, with prices usually low in January and then rising throughout the year. Over the past 22 years, this pattern has been true, with a typical 8.1% drop from June to January; however, despite these declines home prices have still appreciated an average of 7.9%. Moreover, even when home prices dropped 12% from 2016 to 2017, they still increased 7.3% over the full year. Investors shouldn’t be alarmed by monthly or seasonal dips as the prices are likely to rebound over time. Additionally, turnkey investors should bear in mind that turnkey providers are unlikely to sell their inventory at a discount due to seasonality as a result of this rebound.
Analysis of the market inventory
It’s important to understand the impact of inventory to better comprehend the real estate market.
Months of Inventory (MOI) is a measurement used to analyze the supply and demand of homes on the market. When MOI is lower than six, it indicates that there is more demand than supply, leading to above-average home price appreciation.
Two years ago, MOI was at an unprecedented 1.5, indicating significant home price increases were likely. Currently, MOI has declined to 4.1 but is still below the historical average, suggesting that home prices will still rise although perhaps not as significantly as two years ago.
Additionally, the Federal Reserve’s actions on interest rates may play a role in determining short-term home price appreciation. In fact, months of inventory is a great indicator of what home prices are going to do. With less than six months of inventory, we have more demand than supply, which leads to higher-than-normal home price appreciation.
Why invest now?
Investing in rental properties is an increasingly appealing investment option due to the volatile stock market and low returns on bonds. With inflation steadily rising, savings accounts will not generate the spending power they once did, and rental properties are a high-floor option that offers upside potential.
In Jacksonville specifically, it’s an especially lucrative option as home prices have gone up in the majority of years since 1982. Jacksonville’s affordability and the strong job market are driving an increase in demand for rental properties and raising rent prices.
Your job is to find the best risk-adjusted return with your dollars. Rental properties in Jacksonville offer a great opportunity to invest with minimal risk while still receiving excellent returns.
But what about the high-interest rates?
With interest rates rising, Adira Capital is making moves to grow our company offerings. We’ve acquired 3,000 properties and lots in development to pull the right levers for growth, and our rent collection rate is currently at 98.4%.
We also have a goal of reaching 5,000 properties under management which will create consistency and make them countercyclical during a recession. Additionally, we’ve rented 198 new homes this year with an average initial lease duration of 27.1 months, and 261 leases have been renewed with an eviction percentage of 0.18%.
Purchase prices now range from $240,000 to $290,000 and the IRR is 11%+. The majority of our available inventory is already rented providing investors with rental income from day one. Adira Capital also continues to sell properties with construction complete and building out inventory to ensure there’s a usable runway for investors.
Real estate outlook – two things you should know
The outlook on real estate is looking positive for the next two or three years. Home prices are expected to rise, outperforming other asset classes in the same period of time.
The Fed may have an impact on short-term pricing, but over the long run, prices will eventually revert back to their historical norms — making it a great time to invest in real estate.
How to take advantage of opportunities
Investing with Adira Capital presents an attractive opportunity for real estate investors. With access to unique off market and coming to market opportunities, Adira has an advantage over other capital funds.
We have better data than most and a proven track record with its own investments in these areas.
Adira Capital also has a partner ship with Vidorra Property Management. Which lets our investors take an completely hands off approach to real estate investing but still see the rewards.
The data speaks for itself, and all you have to do is listen to it to know that rental property investing is going to help you in this economic downturn more than your stock portfolio.
If you’re on the fence, just remember that we practice what we preach. We’re out here investing right alongside our clients.
To learn more or to schedule a call with our team, click here.