Reading the Tea Leaves of Flagler and Palm Coast January Home Sales

Palm Coast and Flagler MLS Home sales were down 26.5% from Dec. to Jan. So what? Fewer homes were sold in Jan. than the previous Dec. in each of the past seven years. Inquiring minds must look further

Palm Coast, FL – February 14, 2014 – Palm Coast and Flagler county home sales plummeted 26.5% from December to January. So what? Fewer homes were sold in January than in the previous December in each of the past seven years. Actually, home sales remain positive. 6.1% more homes were sold in January than during the same month a year ago. The aggregate value of those sales rose 11.1%.

All real estate markets are local. Ours is cyclical. GoToby.com tracks closed sales as they are recorded through MLS. Closings typically occur two to three months after the sales contract is signed. The low number of closings reported in January is the result of the decline in sales activity in the months leading up to the holidays.

Same month’s sales give a more accurate picture. Some conclusions can be drawn from examining the following January year-over-year comparison:

The average selling price rise exceeds the rise in median selling price .The differences points to more high priced homes in the sales mix. For the same reason, aggregate sales rose 11.1%, faster than the 6.1% increase in the number of homes sold.

Short Sales

Short sales are fading. The aggregate value (sum of all sales) of short sales decreased 35% and now accounts for only 8.3% of all sales volume. Buyers are increasingly reluctant to endure the uncertainty and delays that accompany short sales. As it becomes more of a buyers’ market, their wished prevail. Selling price/square foot actually dropped to from $68.39 to $65.75 year-over-year for short sale transactions (the only segment showing a decrease).

Foreclosed Sales

Foreclosed sales are increasingly more important. New foreclosure filings continue to decline; 137 over the past three months from 274 over the same period one year ago.  The number of completed foreclosures remains high, averaging 100 per month for all property types over  the past three months. Old cases are more efficiently working their way through the foreclosure process.  

Foreclosed homes sales showed the greatest percentage increases in homes sold (+42.9%), aggregate sales (+89.7%), average price (+32.8%) and price/square foot (+20.5%). Foreclosed sales represent 32.8% of homes sold and 26.8% of aggregate sales.

Non-Distressed Sales

Ten years ago, non-distressed sales were not separately enumerated because they were inconsequential. But in January, non-distressed sales represented barely half of total homes sold. Surprisingly, the category showed lesser gains in January year-over-year than the market as a whole except for the rise in price/square foot.

A month is a short time. Looking at a longer period often gives a better picture by evening out the month-to-month fluctuations. The following chart compares the three month period ended January 31, 2014 to the same period one year ago.

Many of the previous conclusions are confirmed by the larger statistical sample, but there are some differences.

Short sales are decreasing, but at a slower rate.

Non-distressed home sales fared much better when viewed over three months. January’s performance was likely due to the increased impact of foreclosed sales that month.

Foreclosure sales dominated in January much more than the three month period as a whole. January might simply be a statistical fluke or the trend towards increased foreclosure sales could simply be accelerating.

Priliminary February results support the fluke hypothesis. Through the first half of February, short sales accounted for 7.5% of home sales. Foreclosed home sales accounted for 28.3%. Both percentages are lower compared to January. And the February median home selling price is up $166,000. An inncrease is expected with fewer foreclosure sales.

Conclusion

Month to month changes in the mix of foreclosure sales, short sales and non-distressed sales impact monthly statistics more than monthly changes in the overall home market. The number of foreclosed homes entering the market is measured by the Court's foreclosure processing efficiency. Lender strategies are also a factor. Lenders, sensing a market upturn, are willing to release more inventory. The market continues to improve, but will not return to "normal" until distressed properties once again become insignificant. Quicker is better but watch for statistical disruptions along the way.