Florida Palm Coast/Flagler November Real Estate Newsletter

How do things look in the fourth quarter, traditionally the slowest quarter of the year for local real estate sales?

Palm Coast, Florida – November 5, 2008 – It’s post election day and we know who our next president will be. To see how the national and local candidates faired in your precinct, click on Flagler County Election Results. Now that the election is over, we can return to worrying about whether the value of our home is going up or down. Financial markets remain uncertain. Reports of a continuing decline in the housing market persist. The fourth quarter is traditionally a soft real estate market. Some analysts predict declines well into next year. But what’s happening in Palm Coast and Flagler County?
Palm Coast dodged a bullet when Palm Coast Data announced that they would not only maintain their existing 1,000 local employees but also add 700 new jobs here (story) . The effects of that decision are already being felt. City Walk, the nearly empty four-building commercial complex on Cypress Point Pkwy is a primary benefaciary. The City of Palm Coast is vacating the present city hall building to make way for new Palm Coast Data employees. The city employees are moving to rental space in City Walk (three year lease). According to City Walk developer Bhagwan Asnani, new tenants have signed leases, spurred on by the arrival of city employees.

Single-Family Homes

The single-family residential sector continues the trend begun in January:
  • The median price of homes sold remains within a narrow band between $160,000 and $170,000
  • Year-to-year comparisons continue to show signs of improved sales volume. 98 single-family homes were sold this October vs. 86 the same month a year ago. Both the second and third quarter of ’08 showed improvement over the same periods last year.
  • The unsold inventory (homes listed in MLS) is holding steady in the low 1,900s.
  • Lender-owned (from foreclosures) and short sales represent an increasing percentage of transactions, primarily due to an increase in short sales.

Lender-Owned and Short Sales as a Percentage of All Sales in Flagler County, FL



Short Sale






















The sheer number of "distressed" properties being sold distorts sales numbers reported, both locally and nationally. If the median sales price for all homes dropped 20%, it does not necessarily follow that your home’s value dropped by the same amount. It also doesn’t mean that the underlying value of all homes dropped by 20%. It only means that the median price of "sold homes" has dropped. It’s what the market is buying now. One of my brothers was in the retail grocery business. He explained the concept this way.
"When the average dollar value of a market basket drops, it does not necessarily mean that food prices are down. It probably means that shoppers are being more cautious, buying store brands rather than national brands, buying cheaper cuts of meat, and cutting back on the purchase of non-essentials."
We won’t know how far overall home values have declined until the distressed inventory has been flushed out of the market. Only then will we see a "normal" market, where selling prices truly reflect a property’s underlying value.

Condominiums and Luxury Properties

The weakest segment of the local housing market is at the high end. This is true for condominiums as well, but the weakness is compounded by the fact that condominiums are often purchased as second homes, vacation homes, or investments. They are discretionary purchases. The absorption rate at some area condominiums reflects the market weakness of the sector as well as that of the luxury home market.

Flagler County Absorption Rates – Condos vs. Single Family- Residential


Absorption Rate

Single Family Homes    
    Under $200K



    $200K – $300K



    $300K – $500K



    Over $500K



    Under $200K



    $200K – $300K



    $300K – $500K



    Over $500K



On the bright side, new construction in the Hammock continues. Several high-end homes are under construction, especially in Ocean Hammock and Hammock Beach. Bobby Ginn’s cash flow problems are more visible with staff cuts, and suspension of dinner hours at the Conservatory clubhouse. But he still managed to host a very presentable PGA Fall Tour tournament last week. 


Assuming no further deterioration in the financial markets, I expect the single-family market to continue moving sideways until the traditional spring selling cycle. By then, some of the bailout money will have trickled into the market and foreclosures will slow down. Increased Palm Coast Data payroll will begin to be a factor as well. Watch for the inventory of unsold homes to move downward then, a good signal that prices will begin to rise.
The luxury and condo markets are beginning to exhibit an increase in foreclosures. These properties will come onto the market as "lender-owned" at low prices but will not remain on the market long. There is a lower percentage of distressed properties at the high end, but those properties still have to be flushed through the market. They will make it more difficult for a traditional seller during that time until the market can normalize. Do not expect prices to normalize at the 2005 – 2006 levels.
3 replies
  1. D W Ferguson
    D W Ferguson says:

    Rental Rates

    Any data on residential short/ long term lease rates for 3 BR/2 Bath Single family type homes & condos– -How about seasonal(S-T) rates for winter/ snowbirds ???
    Surely, this info would also help define the condition/ future recovery trends in real estate values in Flagler Co. Thanks

  2. Toby
    Toby says:

    Reply to D W

    I agree. Rental information would be useful, but there is no central reporting for rental information. If any property management companies can offer input, please call me.

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