Measuring Flagler County’s Real Estate Market Using Absorption Rates
A quick way to check strength of any sector of the real estate market
It’s generally believed that the absorption rate tells us if we are in a sellers’ market, a buyers’ market, or a normal market.
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Sellers’ Market – Rates 1-4
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Normal Market – Rate 5-6
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Buyers’ Market – Rate >7
For instance, there are currently 1501 Palm Coast Lots for sale (Remember: Palm Coast Lots are those 40,000 lots originally platted by ITT in 1969). Of these, 180 are priced at, or below, $50,000. Last month, 9 Palm Coast Lots sold for $50,000 or less. The absorption rate then would be 180 divided by 9, or 20.0. An absorption rate of 20.0 indicates that in an unchanged market, it will take 20 months to sell all existing lots listed at or below $50,000.
One can take this analysis to any type of property, lots, homes, or condos provided there are enough transactions to allow statistical analysis. Using MLS data, I looked at the most popular sections of the
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In Indian Trails, the overall absorption rate is 18.7, but within the $100,000 to $200,000 category, the absorption rate is a much healthier 11.7. In the over $300,000 segment, the rate is 44. Only one Indian Trails home sold within that segment last month while 44 remain on the market.
Some signs of light include:
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Lehigh Woods – Homes $100,000 to $200,000 have a rate of 7.6
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Pine Grove – Homes $100,000 to $200,000 have a 5.0 rate
On the other end of the spectrum, the following areas had no sales of homes over $300,000 while still showing a significant number of home still listed in that price range:
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Lehigh Woods – 18 homes listed over $300,000
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Quail Hollow – 8 homes listed over $300,000
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Seminole Woods – 8 homes listed over $300,000
The current market is a strong buyers’ market. For sellers willing and able to wait 20, 40 months or more, the market will eventually catch up with their price. For those who want or need a quick sale, an aggressive price reduction is probably the quickest, but most painful strategy in today’s market. In an important event, five unsold lots from Ginn Resorts Communities will be auctioned on July 22.
oceanfront lots
can you give me the absorbtion rate for ocean front lots in ocean hammock!!Thanks
Absorption rates
Hi Toby
My question about this topic involves Grand Haven – both homes and homesites.
Thanks for all your info regarding RE
Thanks
Toby, Thanks for this, you have become a trusted source for many of us involved in Palm Coast real estate market. We appreciate the hours you must put into this site and keeping it comprehendable for folks like me who are unfamiliar with intricacies of your profession. Great work keep it up.
Question about "Unchanged Market"
One point that is interesting about this analysis it takes into account an \”unchanged market\”. Which, correct me if I am wrong, would mean no other properties would go up for sale?
Other agents and brokers have stated and posted that Palm Coast is actually on the higher end of the scale when comparing sales to listing numbers each month. When taking that into account, how much does that change the absorption rate? And does it really come down to the bottom-line that price needs to come down or these properties will sit for much longer than even 40 months?
Tidelands
Hi Toby..great job as usual keeping us up to date. Can you give an update on the absorption rate at Tidelands? and also what is the latest on Centex?
Thanks.. JJ
Tidelands Response
We sold 17 residences within the tidelands community last month.
There are roughly 40 remaining residences at Tidelands. Centex (CDP) did not leave Palm Coast. We delayed construction until we could get through remaining inventory. We have 6 more buildings to construct at Tidelands. Recently we were transferred to the Jacksonville division and have a new management and construction team who have assured us we are on track to complete construction at Tidelands, Resort and in the future….marineland. Those are the facts, I guess that would make our \\\”absorption\\\” rate at 2.35
Great
I did see that article just after I responded.
It is nice to see that we are gaining some sort of positive recognition given the obvious within the past.
It is truly out with the old and in with the new, things will only get better from here on out.
Only, I believe we have already attempted to donate the golf course…..
Reply to George
There are currently 4 oceanfront lots listed in Ocean Hammock but there were no sales last month, so there is no absorption rate. In fact, there have been no MLS sales of oceanfront lots in Ocean Hammock in 2007. No sales, no absorption.
Reply to Larry re; Grand Haven
The absorption rate for both homes and lots in Grand Haven is very high. 150 homes are on the market with only three sales last month for a rate of 40. 163 Grand Haven lots are available. Only one sold last month for a rate of 163 (that\\’s 13 1/2 years). There have been 15 homes and 15 lots sold so far in 2007. As of 7/6, there are 13 pending sales of homes and 4 pending lot sales.
Reply to Alan M
1. The analysis does not mean that no other homes would go on the market. It is a measure of the CURRENT supply and demand. If the current monthly sales rate is 10 and there are 200 homes on the market, the absorption rate is 20 (or 20 months). With an UNCHANGING market (i.e. same supply and demand), it would take 20 months to sell 200 houses. And there would still be 200 houses on the market since new listings would have been added.
2. Palm Coast is only on the higher end of the scale when compared to other areas that are worse. The reality is that the local market is very slow. At the peak of the local market, the absorption rate was about 2.
3. In the current market, the only way to sell more homes at today’s level of demand is to drop the prices. If demand increases, more houses will sell at the current price.
Reply to Tidelands Response
Your timing was perfect. This comment came to me minutes after I posted an Article on the same subject titled Centex Update – Selling Condos in a Down Market