Absorption rate in Palm Beach Gardens increases 25%
The south Florida real estate market has been so hot it defies logic. Much of the national and international news does not paint a rosy picture; interest rates continue to drop and that is because the economic recovery is hardy robust. Investors are looking towards the Fed to see what tools they might have left in the box to pull this economy out of the mud.
But none of that seems to be having a negative effect on the local real estate market. For the last 5 months it has been good news and blue skies. Each month around this time we bring you updated numbers for the absorption rate in the northern Palm Beach County area. These numbers, and especially the trend we see in these numbers, are critical when understanding how inventory and demand interact and what role they will have in future price movements. As interest rates entice buyers demand remains very high as inventory levels continue to drop month after month. The interaction of buyers and inventory determine the absorption rate which gives us the number of months it will take to absorb all of the current inventory at the current rate of closings in each local market. So do we continue our reports of good news across the board?
The short answer is no. Real estate sales dropped throughout the region; perhaps because buyers have fewer choices as inventory levels continue to drop but they dropped and it was noticeable. Is it time to say the remarkable recovery we have been experiencing is cooling? Perhaps but this months report certainly shows us that markets change and those changes can be swift. So let’s take a closer look what happened to these absorption rates for the period ending on June 15th.
Palm Beach Gardens – 8.99 months up from 7.22
Hobe Sound – 11.00 up from 7.13
Tequesta – 11.29 months up from 8.08
Things can change and the “average” absorption rate for our four reporting municipalities jumped to 10.07 months from 7.45 months just 30 days earlier. That is a rather defining 35% increase in 30 days and certainly we need to start watching closely. Palm Beach Gardens weighs in this month as our 2nd place finisher with the highest absorption rate we have seen here in three months. A large drop in sales coupled with another decrease in inventory brought the Palm Beach Gardens absorption rate to 8.99 months a 25% increase from the 7.22 reported the previous month. While we jumped to a three month high we did stay well below our 12-month average which currently sits at 11.0 months. One positive sign from a “seasonal” perspective is we are also better off than our year ago numbers when we reported 9.8 months.
There still seem to be plenty of buyers out seeking the right opportunities while inventory levels, higher prices and financing difficulties are finally showing a significant impact on the market. We still have another 2 to 3 months before our winter visitors return and the market can change dramatically during that time. Consumer spending is down three months months in a row, manufacturing contracted in June for the 1st time in almost three years so we need a spark. How much longer can the south Florida real estate market can shrug off the overall economic picture?
Never saw the sun shining so bright……..