Highest Number of Home Sales Closed Since March ’06
The number of homes sold (closed) via MLS reaches three-year high but prices remain low. Distressed sales still about 50% of total.
Palm Coast, FL – August 8, 2009 – Single-family home sales in Palm Coast and Flagler County, Florida ran at a brisk pace in July, albeit at rock bottom prices. 152 homes were reported sold through MLS during the month. This compares to 123 sales in June and 114 a year ago. The $135 thousand median selling price continues to bounce along the bottom as selling prices are held down by the high percentage of distressed property sales (lender-owned through foreclosure and short sale).
For seven months, the median selling price has stayed within a narrow band between $133,650 and $142,000. The median price at the December ’06 market peak was $259,950. So, how far did the Palm Coast/Flagler housing market drop? A former US President might say the answer depends on what the work "drop" means. That’s not so, but there are really several different answers. First, it depends on which measure is used; median selling price, average selling price, number of homes sold, selling price per SF, total sales dollar amount etc. It also depends on how that measure is interpreted. All methods of measurement have their strengths and shortcomings.
For example, using the seemingly straight forward median selling prices above as a measure, housing prices dropped 48.6% (from $259,950 to $133,650). Does this mean that the value of your home dropped 48.6%? No. Median price (half sold above – half below) is preferable to "average" because the average can be affected by only one very large or very small number. But median ignores shifts in the mix of homes sold. More than half of all homes sold to date in 2009 were distressed sales, concentrated in the under $200 thousand bracket. To at least some extent, this factor brings down the median selling price and distorts any interpretation.
One of my brothers is retired from the retail grocery business. He explained this phenomenon when he described shoppers’ behavior during recessions. Total meat sales always dropped, but the revenue drop was partially attributed to the fact that people bought cheaper cuts of meat, not less meat.
A couple of other measures do a better job of showing seasonality in the real estate market; the number of homes sold and the total value of all sales. Looking at the charts, it’s clear that more homes are sold in March, April, May, and June than October, November, and January. But these numbers are not meaningful in evaluating home values. Homes do not go down in value during seasonal slow periods.
Total homes sold and total value of all sales may not reveal much about shifts in home value but they are exceedingly important to those in the real estate profession and others along the transaction trail; title companies, appraisers, lenders, etc. Why? These folks derive their income from transactional volume. The monthly total value of all home sales dropped from $86.9 million in July ’05 to $10.2 million in January ’08 ($11.1 million in January ’09). That translates into an 88.3% drop in real estate commissions paid.
Another fairly reliable number is median dollars per square foot. Like median selling price, it does not adjust for changes in the mix of homes sold. $/SF peaked at $139.72/SF in May ’06, dropping to $68.24 in February ’09, down 51.2%, not far from the 48.6% median selling price decline. When two different measures yield similar results, it gives credibility to both.
National websites that purport to estimate the value of your home should be viewed with caution. They look at dollars per square foot of homes sold in the vicinity but make no adjustment for frontage (e.g. reserve vs. golf course) or for features such as a pool or for deteriorated condition (abandoned).
Other news
Foreclosure filings are accelerating among upscale properties, a good sign of a market correction in process. July saw several filings in communities immune only a few years ago. Among them:
-
Five Conservatory lots
-
Two homes in Ocean Hammock
-
Three Yacht Harbor Village condos (Admiral’s Cove)
-
Five homes, six lots, and a condo in Grand Haven
-
Four condos at Hammock Beach
-
Two Tidelands condos
-
Two Surf Club condos
Continuing a positive trend, the inventory of homes listed on MLS for sale continues to drop. It now hovers near 1,350. It was once over 2,400. Pending and contingent single-family residential sales contracts currently stand at 577. There were fewer than 300 at the beginning of the year. While foreclosures in Grand Haven have increased, there are only 81 homes listed for sale, down more than 50% from a few years ago. There are 18 pending or contingent home sales contracts in Grand Haven, more than double the number two years ago.
Government
Unplanned, I’ve become a real estate version of Dr. Phil, talking with many people. I haven’t heard from anyone who has benefited from the billions of dollars that were supposed to help the housing market right itself (the only exception being the $8 thousand first-time buyer incentive). My sense is that the money (billions) has been squandered or misappropriated. I’d like to hear from readers on this subject. Use "Add Your Comments" if you want to go public or "Contact Us."
Become a Member of GoToby.com: Receive email notices of news, rumors, newsletters, and articles. [click here] It’s free.
Talking points
1. Is there any indication that the first time buyer credit will be extended? It takes soooo long to get approval and close short sales, some may not be able to close before Dec 1.
2. I have read articles and have talked to people indicating that Lenders are not really willing to reasonably renegotiate loans. Makes no sense. Don’t understand why they won’t.
3. Folks I know have benefited from stimulus with extended unemloyment income, assistance on Cobra payments etc. Can only hope all these things together will help the economy.
Lona Modification
My lender Countrywide/Bank of America contacted us about a no cost loan modification without an appraisal. They checked our credit and gave us 2 options. In the end our payment went up $40, but we now have a fixed rate loan under 5%. The total process took about 2 weeks and there was no cost to us.
This was a direct result of federal stimulus money.
Thanks for the in depth info!