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PALM COAST, FL – March 5, 2016 – Although some March home sales are yet to be reported to Flagler MLS, the picture is already quite clear. The market is heating up. Although the number of single-family residential (SFR) home sales declined 12.3% year-over-year, the total value of transactions increased 8.95% as median prices rose 28.1%.
After several consecutive months of gradual improvement, home sales statistics are moving more rapidly.
It’s likely that the new TILA-RESPA Integrated Disclosure (TRID) rules for mortgage closings reduced the number of reported home sales, but it’s unlikely that TILA-RESPA affected selling prices. In other words, the number of homes sold would have been higher without any impact on pricing.
The SFR median price in March was $205,000, a 28.1% increase from March 2015’s median price of $160,000. This is the first “above $200,000” month since October 2007. The jump mirrors the increase from $167,500 in March 2004 to $202,000 in March 2005.
Comparing Flagler County Homes Sold to Median Price
Median price increases are affected not only by increased demand but also by a change in the mix of homes sold. Simply reducing the percentage of lower priced home sales (distressed homes) will raise the overall median price. A 16.8% gain in price/square foot is probably a better indicator of the real year over year price increase.
Short sales and REO (foreclosed sales) comprised only 8.1% of all SFR home sales in March compared to 27.0% one year ago. In 2009 and 2010, distressed sales represented 54.6% and 53.7% respectively of all home sales.
Cash sales accounted for 34.6% of all SFR sales compared to 45.0% in March 2015. More importantly, the cash sale buyer profile has changed.
Cash sales were previously assumed to be investors buying up distressed properties. Through 2015, the median price of cash sales ran 5.0% below the overall median price. The median price for cash sales in March 2016 was $215,000, 4.9% above the overall median price. Two factors have influenced the change. First, the number of distressed properties sold has dropped significantly. Second, TILA-RESPA has added additional time to the mortgage closing cycle, prompting more affluent buyers with cash to choose the cash option rather than financing.
Home inventory is down, both in the number of distressed (bargain) properties and in the total inventory. There are currently 861 SFR Flagler County homes listed with Flagler MLS. This compares to 1014 available homes one year ago. The current inventory includes only eight short sales and 23 REOs.
There are currently 386 SFR homes with pending sales contracts. One year ago, there were 442. The ratio of pending sales to inventory remains relatively constant; 44.8 vs. 43.6 respectively for March 2016 and March 2015.
Recently released U.S. Census figures estimate that Flagler County’s population grew 2.76% between July 2014 and July 2015. That’s 2,831 new residents, bringing the county total to 105,392. Within Flagler County, Palm Coast grew 2.47% to top the 80,000 mark at 80,600 residents.
Presumably, this growth rate has continued since July 1, 2015. Flagler County schools have enrolled 172 net additional students over the past 12 months. This population growth rate creates a demand for roughly 1,000 additional homes, condominiums or apartments annually. During the 1990s, the new construction rate in the county was often in the 1,000 new homes per year range. New home building permits peaked in 2005 at 3,043 (more than the total of the next eight years combined).
Only 573 new SFR building permits were issued in the county last year. The availability of vacant, distressed properties probably absorbed the shortfall, but that source of inventory is evaporating. Pressure to make up the difference is manifested in recent price increases. New permitting activity is accelerating. Year to date, new home permits are running 26.7% ahead of last year’s rate. But the increased rate is still well below an annualized need for 1,000 new residential units.
There were 33 new foreclosure filings in March and only 31 foreclosure completions. A foreclosure completion occurs when the process has run its course and the property is sold at a foreclosure auction. During 2015, short sale median prices were 75.6% of the overall median selling price. REO median pricing was 82.2% of the overall median for the year. Clearly, fewer distressed sales leads to an increase in overall median prices.
The growth of non-distresses sales is accelerating. Although overall home sales dropped 12.3% in March compared to a year ago, the number of non-distressed home sales grew by 10.4%. This, coupled with a 22.8% median price gain in the sector, produced a 25.7% gain in total sales volume of non-distressed homes.
Look for continuing upward pressure on prices in both the home and condo markets. Rents will also continue to rise locally.