May Home and Lot Sales Promising

Both single family residential home sales and sales of Palm Coast lots show a steady market but no signs of strengthening yet.

 June 8, 2007 – Palm Coast, Florida

Residential:

May figures confirm the steady market for single family homes in Palm Coast and Flagler County, Florida. While the median price of $215,000 is 14% below May of last year, it is consistent with the past three months. And the number of homes sold (134) was greater than any month since October ’06 and way above November’s low of 89. But we still have slightly over 2400 homes on the market which represent 17 months of inventory at current sales levels. It looks like the sales level and median price have stabilized.

Some people with whom I’ve talked express concern over the rising number of foreclosures, saying that they bring a huge number of additional homes onto the resale market. While this may be partially true, most foreclosures have been on the market for some time.

A concern hyped by the media is the rise in interest rates, which they claim will trip ARM rates increases, causing more foreclosures. Rate increases, they claim, also make it more difficult for first time buyers to qualify. But these doom and gloom reporters apparently don’t have long memories. I remember purchasing a home in 1990 when the rate was 13%. I also remember my first mortgage in Palm Coast in 2000 at 7%, thinking at the time that it was a great rate. Some foreclosures are certainly because of ARM rate increases, but I believe the following reasons are more common:

• Loss or reduction in income.
• Can’t find renters in current market or rent is too low to cover carrying charges.
• Buyers realize they paid too much in hyped market and find it easier to just walk away from the mortgage payment.

Without any additional influences, I expect that we will spend 2007 flushing out excess home inventory, returning to a rising market in 2008. One factor likely to increase demand is the number of new stores planned and under construction in Flagler County.

Palm Coast Lots:

Palm Coast lots also show signs that the market has reached bottom. Both the median price and the number of sales have stabilized. Eighteen Palm Coast lots sold in May at a median price of $50,000.

Condominiums:

Sales of condominiums continue to be at low levels. Many condominiums are still overpriced at current demand levels. And since condo purchases are usually discretionary, potential buyers can wait on the sidelines until sellers bring their listing prices into line.

• Hammock Dunes – 104 units available at a median listing price of $1.15M. Seven units sold this year at a median price of $885K.
• Surf Club – 45 units available at a median price of $539K. Two units sold this year at a median price of $470K.
• Grand Haven – 25 units available at a median price of $429K. No units sold this year.
• Canopy Walk – 54 units available at $386K. Two units sold this year at $286.5K