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PALM COAST, FL – June 22, 2017 – The Great Recession is over. The rollercoaster ride that is the housing market remains firmly on the ride’s ascending side. Locally, home prices have been rising steadily since the bottom of the ride in January 2012.
In most areas of the country, but not in Flagler County, home prices have risen to exceed the peak of the housing bubble. Analysts typically attribute rising prices to a lack of inventory available for sale. Nationally, the home inventory is at its lowest point in months. Not so in Flagler County where 891 single-family Flagler County homes are listed in MLS. That’s 120 more homes listed than one year ago. But in another key metric, Flagler’s 4 months of inventory is in line with the national 4.2-month supply. And prices are rising here as well.
Flagler's Housing Bubble and Recovery through May 2017
You can see that housing sales have leveled off somewhat while prices continue to rise.
Three Flagler County’s housing market metrics stand out from both state and national reporting.
Cash sales accounted for 35.3% of all Flagler May home sales. That’s higher than Florida’s 26.8% and the national 22.0%. Cash sales are often attributed to investors. All-cash median prices have typically been lower than the overall median price, presumably because distressed properties were readily available and investors were active. With the paucity of distressed properties, that has changed. The median selling price for all-cash sales has been above the overall median in eight or the last nine months, indicating a high-end component to cash sales. GoToby.com believes that some affluent individuals are cashing out some of their recently acquired gains in the equities market and moving it into real estate.
Flagler County and Palm Coast were the “canary in the coal mine,” flashing indicators of the housing bubble and crash well before the rest of the country (e.g. the number of homes sold locally hit its peak in June 2005. Median prices peaked six months later, well before the recession was recognized elsewhere).
For three years (2009 – 2011) distressed properties (short sales and foreclosures) comprised more than 50% of all Flagler home sale, a phenomenon observed only in scattered pockets in the south and west. The pendulum has swung in the opposite direction. We are now on the other side of the norm. Year-to-date, Flagler’s distressed sales have comprised a mere 4.1% of all sales. In May, the percentage dropped to 2.3%. This compares to May’s 6.3% for the state and 5% nationally.
Decline in Distressed Sales in Flagler County
Of 891 open single-family listings in the county, only four are short sales and 17 foreclosures. With so few distressed properties to choose from, demand created by population growth must be satisfied by new construction.
A recent report from the National Association of Home Builders reported a 5.5% decline in housing starts. Single-family unit starts dropped 3.9%. The remainder of the drop was attributed to a 9.7% drop in multi-family unit (apartments and condominiums) starts.
May saw 84 single-family residential (SFR) permits issued within Flagler County, an increase of 35.5% over last May’s 62 permits. Year-to-date through May, starts are up 24.8% over the same period one year ago. For June, more permits have already been issued, through today, than in the entire month of June 2016. At the current pace, June permits will likely top 100 for the first time since May 2006.
In another clear departure from the norm, there are no multi-family buildings under construction in the entire county. Nor are there current permit applications for multi-family buildings. Flagler County’s population exceeds 108,000 and grows by more than 3.100 each year. With both home prices and rents rising rapidly, GoToby.com finds the lack of multi-family construction extraordinary. Without change, workforce housing will become a critical issue in the county.
Source: Local home sales - Flagler MLS - restricted to Flagler County addresses.