Florida Palm Coast/Flagler October Real Estate Newsletter
Third quarter residential sales are slightly above a year ago. Absorption rate shows improvement.
Palm Coast, Florida – October 12, 2008 – The Palm Coast/Flagler real estate market continues its trend of the previous several months with median selling prices in the $160,000 to $170,000 range and volume above the same period a year ago. The number of homes listed for sale on MLS has stopped its decline and is holding in the low 1,900 range, down from about 2,600 a year ago. For the second consecutive quarter, the number of homes sold exceeded those sold in the same period last year.
Probably the most indicative measure of a market’s health is the absorption rate.
Absorption Rate is a mathematical measure of the relationship between supply and demand in the marketplace. It’s derived by dividing the total inventory of product (for sale) by the number of units sold in the previous month. The resulting number (absorption rate) represents the number of months it would take to sell the number of homes represented by the current inventory at the current price. It’s a strong indicator of current market conditions.
It’s generally believed that the absorption rate tells us if we are in a sellers’ market, a buyers’ market, or a normal market.
-
Sellers’ Market – Rates 1-4
-
Normal Market – Rates 5-6
-
Buyers’ Market – Rates >7
The following table shows significant improvement from a year ago:
|
Area |
2007 rate |
2008 rate |
| Cypress Knolls | ||
| Under $200,000 |
18.0 |
7.5 |
| $200,000 to $300,000 |
18.0 |
14.6 |
| Over $300,000 |
18.5 |
18.0 |
| Indian Trails | ||
| Under $200,000 |
15.0 |
8.2 |
| $200,000 to $300,000 |
23.6 |
10.5 |
| Over $300,000 |
22.0 |
42.4 |
| Lehigh Woods | ||
| Under $200,000 |
25.4 |
7.8 |
| $200,000 to $300,000 |
32.0 |
18.3 |
| Over $300,000 |
22.0 |
N/A |
| Matanzas Woods | ||
| Under $200,000 |
13.0 |
12.0 |
| $200,000 to $300,000 |
12.8 |
11.4 |
| Over $300,000 |
42.0 |
30.3 |
| Palm Harbor | ||
| Under $200,000 |
7.5 |
6.5 |
| $200,000 to $300,000 |
19.8 |
6.5 |
| Over $300,000 |
36.8 |
14.7 |
| Pine Lakes | ||
| Under $200,000 |
13.0 |
6.4 |
| $200,000 to $300,000 |
17.2 |
15.0 |
| Over $300,000 |
16.3 |
22.4 |
| Quail Hollow | ||
| Under $200,000 |
23.0 |
3.5 |
| $200,000 to $300,000 |
86.0 |
13.4 |
| Over $300,000 |
N/A |
N/A |
| Seminole Woods | ||
| Under $200,000 |
17.6 |
5.5 |
| $200,000 to $300,000 |
25.0 |
13.9 |
| Over $300,000 |
N/A |
N/A |
| Flagler County (all) | ||
| Under $200,000 |
12.6 |
10.1 |
| $200,000 to $300,000 |
22.6 |
21.6 |
| Over $300,000 |
32.1 |
49.8 |
The absorption rate in the "below $200,000" category shows the greatest signs of a recovery with most areas now in the normal or near normal range. This is the same sector that shows the highest percentage of lender-owned and short sales.The percentage of lender owned or short sale transactions shows no sign of letting up. In fact, the number of short sales relative to lender-owned sales is on the increase. I attribute this to two reasons:
-
Lenders have awakened to the fact that foreclosures are expensive and time consuming
-
Realtors, lenders, and title companies have become more adept at handling short sales
Lender-owned and Short Sales
|
Month |
Lender-Owned |
Short Sale |
|
Apr |
22% |
11% |
|
May |
28% |
12% |
|
Jun |
23% |
12% |
|
Jul |
25% |
12% |
|
Aug |
18% |
22% |
|
Sep |
19% |
28% |
|
Oct (mtd) |
19% |
49% |
Prognosis
The effect of the Palm Coast Data decision to increase their local employment by 700 is an unknown but hugely positive factor. Clearly, it will inject a much needed dose of optimism into the Flagler housing market. The Palm Coast real estate market has shown itself to be a leading indicator. As I’ve said before, we went up faster, peaked earlier, dropped more quickly and further than the market as a whole. We also bottomed out sooner. My original call for the bottom (single-family residential) in January ’08 seems to be "right on." With the absorption rate dropping and the positive economic news from the Palm Coast Data announcement, I expect to see increased transaction activity through the next quarter and beyond.
The City of Palm Coast’s decision to move its offices to City Walk is a big plus to that complex. Look for more commercial, retail, and restaurant operations to open there in the upcoming months.
The present market presents more great buying opportunities than we have seen for years. The latest series of "bailout" moves by the federal government will make more money available for home purchases. It will also allow some facing foreclosure to stay in their homes. Watch for a GoToby feature on this subject this week.
Watch also for continuing updates on the GINNdom of Bobby Ginn. The Ginn Sur Mer PGA Fall Tour event will be held October 27 – November 2 at the Conservatory Golf Course in Palm Coast, FL. Meanwhile rumors of layoffs and sales office closings swirl.
absorption rate
Toby
Thats a good explanation of absorption rates, however I feel that the absorption rate is a bit over rated in relation to a market in dissary!
for example: bulk purchases of mass inventory can scew the absorption rate into believing the market is picking up… as opposed to
normalizing!
absorption
Toby
good point
Tom
What is “brick-and-mortar” traditional banking ser
Good Morning!
I’m interesting wat is “brick-and-mortar” traditional banking service?
can any one explain to me pls???
thx!
Reply to Tom
There are no perfect measures in real estate. The best measures are only slightly better than a guess. That said, absorption rate, along with other critical observations, is better than nothing.