A Sellers’ Market: Second Quarter Palm Coast Housing Market Report

Slightly fewer homes were sold, but total sales are up as prices rise, fewer distressed properties are sold and foreclosures and bank sales are down. Inventory remains tight.

Palm Coast, FL – July 16, 2013 – Slightly fewer homes were sold in Palm Coast and Flagler County in the second quarter compared to one year ago. More importantly, total sales increased significantly as prices rose, driven by increased buyer enthusiasm and by the growing dearth of distressed (lower priced) properties.

For the past three or four years, distressed properties were the major driver of Flagler County home sales. While distressed properties (foreclosures and bank repossessions) continue to affect the local market, it has become clear that more traditional factors are gaining momentum. The absorption rate (4.5 months of inventory) is pointing toward a sellers’ market and prices have begun to rise towards more rational levels. Foreclosure filings for the first half of 2013 were down 32% from the first half of 2012.

Although there are fewer new foreclosure filings, the number of foreclosure completions remains high because Florida’s inefficient judicial foreclosure process was overwhelmed. There are 129 Flagler County properties scheduled to be sold via foreclosure sales in August. Half of these foreclosures were initiated prior to 2010; 12 in 2007, 32 in 2008 and 20 in 2009. Incredible!!





Homes Sold



Short Sales



Short Sale Median Price



REO (lender-owned) Sales



REO Median Price






Non-Distressed Median Price



June Flagler County Home Sales: 2012 v. 2013

June home sales numbers dramatically illustrate the year-over-year change. The number of homes sold this June dropped 9.8% from June 2012. Yet the total value of home sales in June was up 20.3% year-over-year, driven by a 28.1% rise in median price.

Median price increases have been driven by two factors. Median (and average) prices are affected by product mix. The chart shows how much distressed properties sell for less. When distressed sales drop as a percentage of all sales, median prices will rise. The chart also shows the median price of non-distressed homes has increased 24% in the last year.

Buyers are placing a greater premium on non-distressed homes. In June 2012, short sales were discounted 22.0% from non-distressed properties. In June 2013, that discount had grown to 27.0%. Discounts for REO sales have increased from 25.9% to 32.0% over the same period.

Market changes are not restricted to homes. The local condo market too has changed. Inventory is low; 220 Flagler County units for sale through Flagler MLS. Only 8.6% are distressed. I expect the condominium segment to continue heating up because there is no new condominium inventory coming on line from new construction. It will be two years, likely longer, before any new condos are completed.

When someone asked me years ago how to tell when the bottom of the market has been reached, I responded, “Watch for homebuilders to start building spec homes, and then look back about one year. That’s when we hit bottom.” Seriously, builders faced a difficult credit environment along with their natural reticence to get stuck with unsold spec inventory again. They made darn sure things had turned around before venturing into spec building.

Forty-four single-family residential building permits were issued within all of Flagler County in June, making it the first month above forty since July 2007, 314.3% more than June 2012 and more than the entire second quarter of 2011, 2010, 2009 or 2008. The builders have spoken.

What could go wrong? Quantitative easing policy changes have already triggered a sudden rise in mortgage interest rates. I don’t believe that increases to the 7% range will appreciably change buyers’ and sellers’ behavior, but some believe that much greater inflation is inevitable. Higher mortgage interest rates will certainly limit buyers’ choices and dampen their enthusiasm. Current highs in the stock markets are more due to cheap dollar-driven inflation than to any underlying strength in the economy. What happens if stocks suffer a downward adjustment? What happens when people begin to realize that their dollars don’t buy as much as they used to? The current sense of wealth (wealth effect) will be gone. And that will not be good for the housing market.

1 reply
  1. charles piligian
    charles piligian says:

    simple chart

    the chart showing the number, pricing, and impact showing each category of sales was the first time anyone has presented a simple analysis of sales which gives a perfect picture of the June market results. Hope you will continue to present this in succeeding months. Thank you.

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