Centex Update – Selling Condos in a Down Market

Price Adjustments, incentives, and proactive marketing are paying off.

July 17, 2007 – Palm Coast, Florida – Flagler County MLS data shows that nine condominiums were sold in the county during June. During that same period, twenty-two Tidelands condominiums were sold, according to a Centex source. In addition, six condos were sold in the resort complex within the past six weeks.

What is even more remarkable is the absorption rate, an industry measure of the relationship between supply and demand. There are between twenty and forty Tidelands units still available, meaning that the absorption rate is between one and two – indicating a strong buyers market. Meanwhile the rest of the Flagler County condominium market languishes – 586 condos listed vs. 9 sold in June. This reflects an absorption rate of sixty-five and illustrates the disconnect between many condominium sellers and current market conditions. In a normal market, the absorption rate is between five and six (Absorption Rate).

So how does Centex do it? And why aren’t others selling successfully? 

• Centex has priced units at a level that will sell in today’s market. A buyer is not really interested in how much the seller paid for the property, or that the seller doesn’t want to take a loss, or how much other units are listed at. They are only interested in the underlying value of the property (including amenities) to them.
• Centex benefited from gaining 1000 Hammock Beach Club memberships and 250 full golf memberships from Bobby Ginn when they sold the Ocean Hammock Golf Club. They are offering these aggressively to entice buyers. The current incentive package includes closing costs up to 3%.
• Centex has been very active marketing, delivering their story at several upscale golf clubs and broker presentations. 

Results have been gratifying. In fact, Centex is now contemplating the prospect of building out the other two condominium pads at the resort complex. They are not, however, considering completing the condo/hotel. They continue to look for a hotel operator to take over this part of the resort project.

Others still trying to sell their condos into this tough market can take some lessons from Centex.

• They can adjust their price to align with current market conditions.
• They can include incentives (e.g. “Seller pays all closing costs”, etc.). Some sellers in other markets have provided a new car, plasma TV, or other high-ticket item as a buyer incentive.
• Work with your Realtor to come up with some creative marketing strategies.

People are justified in their opinion of how poorly Centex initially handled their pull-back from the resort project. And they still need to follow through on an equitable transfer of the Palm Harbor Golf Course to the City of Palm Coast. But they have done a good job of cleaning up and landscaping the resort site. And they certainly are doing what needs to be done to make sure Palm Coast is not left with a glut of unsold and unoccupied condominiums at their project.