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PALM COAST, FL – June 16, 2021 – Flagler County and Palm Coast were the poster children of the housing bubble 15 years ago, so it is easy to look at the area’s recent bullish housing market with a degree of trepidation. What is behind this latest surge? Are we in for another crash? Is this the new normal? It appears we are in a parallel universe where up is down and down is up.
NEW PENDING SALES CONTRACTS FOR SINGLE-FAMILY HOMES
The years between 2008 and 2012 marked the depth of Flagler County’s housing bust. Highlights, or lowlights, included:
Today's market is seemingly no better defined than the turgent market of 15 years ago, but a closer look reveals fundamental soundness that did not exist then. The numbers are nonetheless startling.
The most amazing aspect of this upside-down reality is that Flagler County is not unique. Stories of scant inventories, multiple offers, bidding wars, and double-digit price increases can be heard from most parts of the country.
The homebuilding industry was decimated by the great recession. Many skilled construction workers found other careers. Coming into the 2020, there was a supply shortage of 2.5 million U.S. housing units, according to research by Freddie Mac.
Vacant homes remaining from the great recession were absorbed long ago, leaving new construction as the only remedy for the supply shortage. But builders face labor and construction supply shortages, coupled with the extended timeframe to find, zone, permit, and develop land for new projects. These trends are not likely to change soon, if ever.
There are fundamental differences between the last bubble and the current market. The 2005-2006 bubble was driven by speculator buyers and easy credit. Today’s speculators are chasing virtual currency and fringe stocks rather than real estate. While mortgage rates are at historic lows today, lending standards are strict. Today’s buyers are not only creditworthy but also plan to hold onto their purchases, not flip them.
Migration to Florida, particularly from high-tax states that experienced high Covid-19 hospitalization and death rates as well as riots and rising crime rates has accelerated. Maslow's hierarchy of needs rests upon the most basic needs: food, water, warmth, rest, security, and safety. A recent analysis of address change notifications to the USPS indicates that change of address filings in Flagler County are about evenly split between those who moved within the county, those who moved from another county in Florida, and those who moved from another state or internationally.
The local economy was driven 15 years ago by the construction industry. Today, Flagler’s economy is stronger and diversifying. The shuttered Sea Ray plant is reopening under the Boston Whaler banner. Our economy is shifting its emphasis towards healthcare. Town Center will soon see UNF’s MedNex campus and Jacksonville University’s satellite advanced degree healthcare campus. Two new hospitals are planned in the city. Healthcare is a well-paying growth industry and is less subject to economic turbulence.
Flagler County has been rediscovered. Large regional and national builders realize that this is the last affordable option on the entire east coast. Flagler schools are excellent. The county’s crime rate is low. There are plenty of options for outdoors activities, miles of beach and Intracoastal Waterway access, and the climate is wonderful.
The double digit increases in home prices are not sustainable in the long term. They will ultimately begin to level out, but the forces behind today’s strong housing market are powerful and enduring. There should be no bubble to burst this time.
Toby Tobin: REALTOR®
I'm a licensed Florida commercial REALTOR® affiliated with Grand Living Commercial Realty in Palm Coast, Fla. As a real estate consultant to developers/builders, homebuyers, and sellers, and as a journalist, I have years of experience and a treasure trove of relevant data and local institutional knowledge.
Call me at (386) 931-7124 or email me at Toby@GoToby.com.
Listen to my radio show, Real Estate Matters, every Saturday morning right after the 11:00 A.M. news break on WNZF News Radio at 1550 AM or 94.9 FM. Download the Flagler Radio App from the App Store so you can hear Real Estate Matters from anywhere in the world.