Low inventory of existing homes for sale and a growing but insufficient pace of new home construction are not keeping up with demand. Result: rising prices and rents.
PALM COAST, FL – November 14, 2016 – Demand for homes in Flagler County and Palm Coast is strong. Unfortunately, the low inventory of existing homes for sale and a growing but insufficient pace of new home construction have created an imbalance between supply and demand. The result: higher sale prices and rents.
As our real estate market returns to normalcy, the role played by distressed properties has become more clear. To an immeasurable degree, the abundance of available distressed property, presumably vacant, disguised the demand for additional residential housing units. Our population was growing, but without putting pressure on new construction.
At the same time, lower selling prices of distressed homes depressed all prices. They led to lower comps which, in turn, effected loan availability for resales of existing properties and for financing for new home construction.
Distressed properties accounted for more than half of all MLS sales of Flagler County homes during 2009, 2010 and 2011. The percentage recorded as distressed sales declined gradually for the following three years, then more dramatically in 2015. Suddenly, at the beginning of the 2016 peak selling season, distressed properties had essentially evaporated. Year-to-date distressed sales comprise only 9.2% of unit sales and only 6.7% of total sales volume. The loss of a reliable vacant home inventory exposed the hidden demand for more residential housing created by Flagler's increasing population. This is illustrated in the Infographic below.
By staying offshore, Hurricane Matthew minimized Flagler County damage. We were very fortunate. The most consequential damage occurred on the barrier island. Damage to Route A12A in Flagler Beach was dramatic, but the state reacted quickly with temporary repairs which restored access to beachside residential and commercial properties. Flooding was evident in Surfside Estates in Beverly Beach as well as Sea Colony and Marineland Acres in the Hammock.
Naturally, the storm prompted some delays due to re-inspections and re-negotiations, but home sales for October held at a surprisingly steady pace. Lindsay Dolamore, president of the Flagler County Association of Realtors® (FCAR) told me that an unofficial survey of member brokers revealed only one case in which a buyer had walked away from a pending sale.
160 single-family Flagler County homes were reported sold through FCAR during October, down slightly from 186 one year ago. However, prices are up 12.8% overall; enough so that the total value of sales rose 2.3% (even though unit sales declined). And while 26 fewer homes were sold in October 2016 vs. October 2015, building permits for single-family homes were up by 20 units.
Normal (non-distressed) home sales were down only 4.5% from October 2015. The median price in this category rose 9.5% to $210,000. Total October sales volume for single-family homes rose 10.0% year-over-year.
Going forward, GoToby’s only concern is the shortage of inventory of existing homes for sale (only four month’s supply) coupled with the shortage of new residential construction. We are on track for more than 700 permits issued in 2016, an improvement from 576 in 2015. This year’s higher level, however is barely more than half the demand for new homes created by our growing population.
Builders are limited by a lack of skilled tradespeople. It would be nice to think that the answer to Flagler County’s problem is an influx of experienced workers from other parts of the country. Unfortunately, the shortage of skilled construction labor is not a local problem. It is systemic throughout the country, rendering a quick cure impossible.