Foreclosed Homes Dominate Distressed Market Segment as Short Sales Fade
Short sales are quickly becoming a non-factor, representing only 4.7% of local February home sales and 5.7% of active home listings. Sales of foreclosed homes, however, remain brisk.
Palm Coast, FL – March 10, 2014 – Short sales are quickly becoming a non-factor, representing only 4.7% of Flagler County February home sales and 5.7% of active home listings. Foreclosed sales (sold by lenders after taking them back through a foreclosure sale – also commonly referred to as REOs), however, remain brisk.
The ground is shifting. The number of Flagler County homes sold (closed) through Flagler MLS (Multiple Listing Service) during February is unchanged from a year ago. But the number of homes sold is the only measure that hasn’t changed. The median selling price rose from $125,000 to $155,000, largely due to rising prices, but also due to the small number of short sales and increase in the number of non-distressed sales.
Once popular, short sales have fallen into disfavor. In a rising market, lenders and buyers are unwilling to be tied up in a lengthy transaction. Short sales typically take months to close and carry a high degree of uncertainty. Shirley and I waited seven months to close on our short sale condo purchase three years ago. Even then, the deal nearly unraveled at the last minute as the two lien holders argued about their split.
While short sales wane, REO sales are booming, accounting for nearly 30% of all February sales. REO sales typically close in weeks rather than months and are prices to sell quickly. The following tables offers some insight into the 2013 to 2014 market shift.
|ALL HOMES SOLD||150||148|
Clearly, there is a steady supply of buyers in both the traditional market (non-distressed) and the distressed market. While unit sales remained unchanged, higher prices drove the market as measured in aggregate county single-family home sales, which were up 36.8% to $31.56 million, the highest February sales total since 2007.
Absorption rates (months of inventory) are also telling.
|ALL HOME SALES||6.9|
Flagler County condominium sales present a different picture. Unit sales are down 31.9% for the first two months of 2014. But prices have definitely risen. The median selling price rose to $192,997, up nearly 40% from $137,900 one year ago. The average selling price per square foot also showed a sharp increase (up 33.8%); from $123.56 to $165.37.
There are no new condominiums under construction in the county, but the inventory of units listed for sale is rising. Throughout 2013, the number of condos listed for sale hovered around 220. Today, there are 262 units available. Declining unit sales coupled with rising inventory affect the absorption rate, which now stands at 13.8. One year ago, the absorption rate for condos stood at 8.0.
The decline in unit condo sales and increase in selling prices are likely due, in part, to the decline in distressed condo sales. During 2013, 43 short sales plus 70 REO sales made up 31.3% of the year’s condominium sales. Through February, there have been one short sale and five REOs. There are only 23 distressed condos presently listed for sale.
44.8% of all listed condos are within the Hammock Dunes DRI (Development of Regional Impact – Hammock Beach, Cinnamon Beach and Hammock Dunes), located on the beach side of the Intracoastal Waterway. The median listing price for that market segment is $494,000. The median price for all other listed Flagler condos is $185,000. The Hammock Dunes DRI condominiums represent fully 71.7% of the total of all Flagler County condominium listing prices. It's no wonder Palm Coast would love to annex the Hammock into the city. With such a value disparity, any shift in sales from one segment to the other can affect median selling prices substantially.
Throughout last year, builders pulled double the number of single-family building permits than during 2012. During January, 55 building permits were issued, a very encouraging development (pun intended) and the most permits issued since June 2007. Only 21 permits were issued during February compared to 27 during February 2013. The dip appears to be a blip however. March new permit activity is on track to well exceed March 2013.
Leave a ReplyWant to join the discussion?
Feel free to contribute!