Palm Coast Real Estate Market Enters Slow Season
124 single-family homes were sold via MLS in Flagler County in October; down by 11 from September, but up by one when compared to a year ago.
Palm Coast, FL – November 11, 2011 – Palm Coast and Flagler County’s real estate market chugged along in October, demonstrating little change over recent months. 124 single-family homes were sold via MLS in October; down by 11 from September, but up by one when compared to a year ago. October’s median selling price for existing residential homes was $124,450, up 8.9 percent from September but off by 2.8 percent from one year ago.
The underlying strength of the local market is demonstrated by the year-to-date gains in both the number of homes sold and the total value of those sales. 1,230 homes were sold during the first ten months of 2010 compared with 1,345 this year, a 9.3 percent increase. Even though median selling prices have been slightly lower than in 2010, the total value of sales in the first ten months of 2011 was $212.5 million, an increase of 4.9 percent compared to$202.5 million during the same period last year. Remember too, unlike last year, there were no artificial first-time home buyer tax credits to stimulate sales this year.
Seasonal Market
Signs of a slowdown are becoming apparent. Brokers and agents report that fewer prospects are walking through their doors. The inventory of homes listed for sale on MLS has risen slightly. It’s above 1,000 again for the first time since September. But on the plus side, the number of homes under contract remains above 500. The seasonality only affects sales volume. Prices remain unaffected by seasonal dips in volume.
The slowdown is not unexpected. Palm Coast’s real estate market is seasonal. In the past seven years, the month with the fewest homes reported sold in Flagler County has been January (five times) and February (two times). MLS reports only closed sales. Sales close several weeks or months after the buyer and seller sign a sales contract. And don’t forget the time buyers spend looking before selecting a purchase. So the present slowdown in buyer activity fits in with the anticipated January and February lows.
Condominiums
When distressed (bank-owned or short sale) condominium units are purchased, they usually join the ranks of unit current with their association fees. This helps condo associations become more fiscally sound, which reduces the risk to new buyers, which increases demand. The cycle, once begun, tends to be self-generating and self-fulfilling.
Tidelands continues its condo mini-boom. There are only 19 units listed for sale via MLS. That’s less than four months of inventory at current pricing. Seventeen additional units have Pending or Contingent contracts. The number of units that are more than 90 days delinquent in association payments has been reduced by more than one third since the beginning of the year.
At European Village, keyed access to elevators has reportedly eliminated the transient visitor problem. The courtyard has been newly landscaped and the exterior pressure washed. As with Tidelands, units that have gone through the foreclosure or short sale route are now contributing fees to strengthen the association’s finances.
The City of Palm Coast will host a FREE live concert at European Village featuring the acoustic rock sounds of Old Haw Creek on Friday, November 18th from 7:00 P.M. to 10:00 P.M. Bring your lawn chairs to this great opportunity to see EV’s new look.
Hammock Beach one-bedroom condominiums present an interesting investment opportunity at recent selling prices, driven lower by distressed sales. Units have been selling readily at prices in the low $100s, with some below $100,000. One unit sold for $149,000. The number of units available for sale has dropped to five. Could sellers be jumping the gun with listing price increases? All five units are listed well above recent selling prices. Two are listed at nearly $300,000.
GoToby.com will be evaluating other local condominium projects soon. Quite simply, the amount of distressed inventory has finally driven prices down in the second home/investment market, including condominiums. Condominiums carry monthly association fees and special assessments can be levied if association funds cannot meet costs. These same risks make most condominiums ineligible for government insured loans, restricting the buyer pool to cash buyers or those who have alternative financing. That’s why condominiums are selling further below their intrinsic values than single-family homes. It’s also why condominiums have a greater potential to appreciate in value when the real estate market returns to normalcy.
Buyers looking for a perfectly safe decision should not be in today’s condo market. But buyers willing to balance value with risk can find some terrific values.
Shadow Inventory
Much has been written about the "shadow inventory." Shadow inventory is comprised of the "in foreclosure" properties lenders hold because they don’t want to dump them on the market all at once. First, I don’t believe anyone really has a good handle on the number of properties that would fit that definition. The media reports foreclosure numbers provided by RealtyTrac, a California reporting service. I believe these numbers are inflated, which increasing the perceived shadow inventory.
More importantly, banks have demonstrated that they are totally incapable of "dumping" a significant number of properties at one time. Their previous efforts to improve the efficiency of their foreclosure processes resulted in robo-signing foreclosure mills which, in turn, heightened borrowers’ foreclosure defense options and increased oversight. The increased oversight has done little to solve the problem, but it has, along with more vigorous foreclosure defenses, extended the time line of the typical foreclosure.
There’s another class of property that rightfully should be classified as shadow inventory; those held off the market by prospective sellers because prices are simply too low at this time. Included in this group are owners who would like to sell but are underwater on their mortgage. Many do not want to "take the hit" to their credit rating brought on by foreclosure, a short sale or deed in lieu. They are just "hanging in there" until prices return at least to their mortgage balance.
But how does one count these owners? Like so much of real estate analysis, the numbers are fuzzy.
Phantom Inventory
I’d like to introduce another significant but difficult to measure category; the Phantom Inventory. These are properties listed for sale but at prices so unlikely to draw a buyer, they shouldn’t be included in market stats.
Should the two Hammock Beach one-bedroom condos priced at $299,000 and $298,000 respectively be included in an analysis of condo inventory? They’re listed at more than twice recent selling prices.
Should two Conservatory lots listed respectively at $135,900 and $142,500 be included? Conservatory lots are selling again, but only at prices well below $30,000.
Four Cypress Knoll homes are listed between $339,000 and $384,000. Yet none of the 40 homes sold in that community this year has fetched as much as $300,000.
Maybe we need a "Listed But Not Really To Sell" category. How about FSBO – For Sale By Optimist?
Excellent Analysis
Great article, Toby. Phantom Inventory and the propsed "FSBO" are spot on.
R&D in G/H