Condo and Lot Markets Lead Weakness

Single family home market becoming stable

March 1, 2007 – Existing Palm Coast single family residential home sales are still weak, but it’s beginning to look like they are approaching the bottom of the correction curve. Prices remain below those of a year ago but both prices and sales volume are stabilizing. I’ve updated the charts (below) from the previous newsletter to show the activity of the first two months of 2007. These figures represent closed sales as reported to the MLS. Remember, there is a lag of 6 – 9 weeks between the time a sales contract is written and the date the sale closes.

Median Sales Price of Existing Homes

The January median sales price for an existing home in Flagler County was $220,000, compared to $239,300 for all of Florida, including the inland areas. Compared to coastal areas, Flagler County remains a relative bargain. But the current inventory of unsold homes is almost 2400, nearly one-year’s supply.

Palm Coast Lots (excluding those with salt water canal frontage) still need some more price reduction to generate sales. Only 14 lots have sold in each of the first two months of 2007. Over 1,600 lots remain on the market (a nine-year supply). The current median sales price is about $55,000. This is still too high to generate the number of sales required to flush out the inventory glut. Look for prices to drop below $50,000 before an appreciable increase in sales is measured. Only 90 of the 1600 available PC lots are listed at, or below, the current median selling price.

Median Sales Price of Palm Coast Lots

The most anemic sector is the condominium market. Overall, there are 565 unsold condos in the county. Only 12 have sold this year. 234 units remain unsold in the over-$500K category while only four have sold for over $500K this year. Nearly half the inventory is concentrated in five developments. The following represent resale units only and do not include original sales by the developer:

Hammock Dunes:

• 26 Units sold in 2005
• 14 Units sold in 2006
• 2 Units sold in 2007 YTD
• 99 Units for sale

Cinnamon Beach:

• 24 Units sold in 2005
• 7 Units sold in 2006
• 1 Unit sold in 2007 YTD
• 58 Units for sale

Surf Club:

• 33 Units sold in 2005
• 6 Units sold in 2006
• 0 Units sold in 2007 YTD
• 33 Units for sale

Canopy Walk:

• 62 Units sold in 2005
• 12 Units sold in 2006
• 1 Unit sold in 2007 YTD
• 57 Units for sale

Grand Haven:

• 2 Units sold in 2006
• 0 Units sold in 2007 YTD
• 27 Units for sale

It’s not surprising that the single family residential market was the least effected and the quickest to stabilize. Buying a single family home is a relatively short term decision. It can be occupied immediately, usually by the owner. A lot, on the other hand, is a longer term purchase. It cannot be occupied for about two years. Condos are more likely  vacation properties or investments. These decisions can be deferred. When we see single family residential pass through the bottom of the correction, lots and condos will follow, but not necessarily quickly.

On the positive side, the City of Palm Coast approved the plans for the SuperTarget store and the Fairfield Inn. The Fairfield Inn will include a Carrabba’s Restaurant. These additions will make Palm Coast more attractive to potential residents. I predict that we will not see much change in the local market for 12 – 18 months. This period represents a great buying opportunity for the savvy investor. The excess inventory will sell off during that interval and the market will turn up again, fueled by the added retail and restaurant options coming on-line over the next few years.