Newsletter – Flagler Real Estate Market has Settled Down

Single-family home sales down slightly but median selling prices, price per SF and aggregate sales volume are all up. Short sales are no longer a significant factor. REO sales are up.

Palm Coast, FL – April 7, 2014 – The steady increase in the number of homes sold via MLS in Flagler County year-over-year has apparently come to an end. The number of homes sold during the quarter ending March 31, 2014 was down 6.7% from the same period last year. But the median selling price this past quarter was up 29.8% from 2013.The average price paid per square foot was also up, increasing by 13.1%. Aggregate sales increased 10.7%.

Flagler/Palm Coast is finally showing signs of a normal market, with distressed homes no longer driving the market. Realtors® are saying that the inventory is way down. The actual inventory of single family homes available April 1 through MLS is 22.0% above last year’s level but is feels like it’s less because buyers are still looking for bargain prices. There aren’t nearly as many. The current inventory of listed homes represents about seven months of sales at current prices.

Short sales have practically vanished; only 7.29% of aggregate sales in March.  The median price ($140,000) of currently listed REO (foreclosed or lender-owned) homes is above the median selling price of all homes sold in the first quarter 2013. The median listing price of all Flagler homes is $220,400. Yet the median selling price of all non-distressed homes sold in the first quarter was only $164,070. It looks like a combination of bargain-seeking potential buyers facing overly-optimistic sellers.

Tight underwriting and appraisal standards continue to hold back our housing recovery. Cash buyers accounted for 49.0% of all March home purchases.

Offsetting the slight drop in home sales was an impressive 47.7% increase in single-family home building permits issued. I expect new construction to gather even more strength in the second quarter.

The condominium market is even less affected by distressed sales. Only two short sales and 13 REOs were among the 65 condominiums sold in the county during the first quarter. Compare to 10 short sales and 20 REOs one year ago. The median price of all condos sold year-to-date through March 31 is $166,000, an increase of 23.0% year-over-year.

Expect condo sales to be affected over the next several months by two factors:

1. There are still not new condominiums under construction in the county.
2. The Cinnamon Beach at Ocean Hammock Condominium Association’s dispute over construction defects and deficiencies will take months to resolve.  Potential buyers may be reluctant to enter into a contract with the uncertainty of the dispute's outcome and the likelihood of special assessments.
3. Lenders continue to be reluctant to finance condominium purchases. Fully 70.8% of condos purchased in the first quarter were cash transactions.

Flagler County's economic development efforts are proving effective. Flagler's economic climate is showing signs of improving at an increasing rate, bolstered in part by successes in both Volusia and St. Johns counties. If Flagler's progress continues, it will be the primary driver of increased home and condo prices and of new home construction.