Absorption rate in Palm Beach Gardens down another 9%
Everywhere one turns there is good news about the real estate market; locally, statewide and nationally. Earlier this week the National Association of Realtors reported that existing home sales rose in every region but the west, which they point out was down primarily due to what they call “tight inventory”. Add to increasing national sales good news the prices are up good news with nationwide median price up 9.4% from the same period in 2011. July marked the fifth straight month of increasing prices and the largest monthly gain in over 6 1/2 years.
Minutes after that report the wires lit up with news from the Florida Realtors® who reported that statewide sales and median prices rose in July while inventory levels continued to shrink. Interest rates have jumped a bit but are still at funny money levels. Even tighter lending standards have not had an effect on slowing down what has been a robust recovery.
But locally sales have slowed for the first time in almost 6 months and there is no reason to believe that demand has waned. In fact there are buyers everywhere and any new listing is inundated with potential buyers within hours of it hitting the market if it is in an inventory challenged market segment and priced well. Each month we look at absorption rates as no metric paints us a better picture as to where prices may be heading from current levels. So let’s take a closer look what happened to these absorption rates for the period ending on August 15th.
Palm Beach Gardens – 8.03 months down from 8.8
Hobe Sound – 12.44 months up from 10.42
Tequesta – 17.6 months up from 11.29
The strength of a market can change quickly and the “average” absorption rate for our four reporting municipalities jumped for the 2nd month in a row to 11.48 months from 10.07 months just 30 days earlier. Just 60 days ago that average stood at 7.45 months and at some point we have to start asking is inventory the only issue or are we seeing a shift with the market starting to cool just a bit? After all a 54% increase in the absorption rate in a 60 day time span is significant and certainly we need to continue watching closely. We started this months report with Tequesta and Hobe Sound who both showed significant increases in their absorption rates but things change dramatically when we get in to our two larger municipalities. We next move to Palm Beach Gardens who finishes in 2nd place in this months report and a reversal as they show a decrease in the absorption rate. A nice increase in sales coupled with another decrease in inventory brought the Palm Beach Gardens absorption rate to 8.03 months and a 9% decrease from the 8.8 we reported the previous month. As we continue to see the absorption rate retreat we stay well below our 12-month average which currently sits at 10.69 months. From a “seasonal” perspective we are also far below our year ago numbers when we reported 11.51 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 1 to 2 months before our winter visitors return and the market can change dramatically during that time. With the economy still in rather poor condition and all eyes on the November election it is hard to see robust growth in sales over the coming weeks.
Watch closely as this market is starting to get very, very interesting……