Florida Palm Coast Flagler July Real Estate Newsletter
The pendulum is starting to swing the other way.
Palm Coast, Florida – July 4, 2008 – The first half of 2008 has passed. How did the Palm Coast, Flagler County, Florida housing market perform in the first six months? What’s the prognosis for the months to come? I’ll attempt to answer both questions in this real estate newsletter.
First, let’s look at a few raw numbers for the first six months (single-family residential homes sold through MLS in Flagler County, Florida):
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638 homes were sold in the first half of 2008 vs. 703 during the same period last year, a 9% decline.
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The median selling price (median means half sold above and half below) so far this year is $169,250, down 23% from $219,900 for the same period last year and a full 35% from the $259,950 high reached in December ’05.
If I were a member of the main stream media, my factual reporting would stop here and I’d conclude that the housing slump continues to be a disaster with no let up in sight (envision an appropriately demoralizing headline). If I were willing to dig a bit deeper, I could add that the drop in sales was really more dramatic since many homes sold in 2006 were purchased directly from builders and not reflected in the MLS numbers. But if I were a member of the main stream media, I wouldn’t be writing this on a fourth of July.
There is no dispute that the Palm Coast/Flagler housing market has taken a big dive. But a closer look at the numbers reveals some encouraging news. With regard to single-family housing, the pendulum is starting to swing back the other way.
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The 384 homes sold in the second quarter of ’08 is 11% above the 347 homes sold in the second quarter of ’07, the first time any quarter beat the previous year’s quarter in over three years.
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The number of homes available on the market now stands at 1,946, down more than 50 units from just a month ago and from 2,500 at the beginning of the year.
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Lender-owned (foreclosure) and short sale transactions represented 35% of sales in June, down slightly from 40% in May.
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The absorption rate for Flagler County homes under $200,000 dropped from 9.0 to 8.3 in a single month (it was 14.1 just 10 months ago). The rate for homes between $200,000 and $300,000 dropped from 20.9 to 17.14, also in one month (it was 23.5 10 months ago). Only for homes over $300,000 does the rate remain stubbornly high (42.61).
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24% of MLS home sales in the first half of 2007 were attributable to builder inventory, corresponding to on 7% this year; a good indicator that the surplus of unsold builder inventory still prevalent in much of the country has mostly evaporated from the local market.
While sales activity of both condominiums and Palm Coast lots show encouraging signs, the transaction numbers are still too small to be statistically relevant. But Palm Coast lot prices have stabilized with the median selling price settling in just below $30,000. Another bit of encouraging news comes with the MLS posting of a pending contract for a lender-owned Conservatory lot, signaling the first potential resale of a lot in that Ginn Hammock Beach community in over two years.
In other news, two of Palm Coast’s largest developers are facing urgent cash flow issues. Ginn Clubs and Resorts missed a June 30 interest and principal payment on a $675 million Credit Suisse credit facility. They have been granted 30 days to work out a solution, during which the company expects it will be able to restructure the debt. (full story)
WCI Communities, developer of the condominiums in Hammock Dunes, faces an August 5th cash crisis. WCI need to raise new capital, restructure its debt, or sink into bankruptcy, after holders of its convertible notes told the company last week they would exercise their option to be repaid. The amount due is $125 million, an amount analysts say WCI does not have.
Prognostication (looking forward):
As we enter the summer and fall months, traditionally a slow season for realtors, I expect single-family home prices to move sideways (with no increase in the number of transactions) as we continue to work through the continuing incoming inventory of lender-owned properties. But when the inventory of unsold homes falls below 1,500, I expect to see prices begin to climb slowly. Inventory dropped since the first of the year in part because discretionary sellers pulled out of the market, unwilling to drop their asking price to meet competitive lender-owned pricing. Once median prices reach the $190,000 to $200,000 range (where they were in December), discretionary sellers will begin to re-enter the market. This will lead to a flattening out of prices at that level for a while and a return to normalcy.
What event will signal the certainty that we are again in a bull housing market? Watch for construction starts of builder specs. The conditioned skepticism of both builders and their lenders will prevent spec building until well after the rest of the world has acknowledged the upturn. Then hold on for another ride as the pendulum gains momentum.
Fishkind and Associates highly regarded Econocast report predicts the Palm Coast MSA population will reach 104,068 by 2010. Fishkind further acknowledges that property tax, insurance issues, and rising housing prices will cause some retiring baby boomers to reject Florida as a retirement destination. But the sheer number of retiring boomers will insure that "Florida will remain the fastest growing state in the Southeast by a wide margin."
Inspirational
Thank you Toby for the very informative and inspiring news letter…can you enlighten some of our Media friends to stop being so negative?
Thank you again for your great website.
Stephanie