Absorption Rate in Jupiter Remains in Tight Range
This week we move into the second half of the “season” down here in South Florida. Historically, each year around November 1st our northern friends flock to the area only to return home when May rolls around. You used to be able to count on it, but every year the beach is crowded earlier and the Food Shack line is longer into May. As we look forward to the next 90 days we “look back” each month at this time to review the absorption rate in the various municipalities in the Northern Palm Beach County region.
The absorption rate is a very important metric when looking at the strength of the market and gives us an idea of what we can expect moving forward. The rate simply tells us how long it will take the market at it’s most recent sales levels to absorb all of the available inventory. The lower the rate the stronger the market.
We have seen a lot of volatility in sales lately; just look at our recent articles where sales in Hobe Sound jumped 69% over the previous month while those in North Palm Beach fell 75%. Granted these are both smaller towns but the swing is dramatic and can mainly be tied to the availability of well priced homes that a buyer has to choose from. Our northern friends, who are considering purchasing a home this year, are finding that prices are higher and the perfect casa in the sun is harder to find. One that hit the streets in Jupiter on January 1st had a total of 794 properties to consider when the previous year they had 1,055.
Those borrowing money to finance their purchase are finding that interest rates have also fallen during that same time period. The rate on a 30 year fixed mortgage at the “average overnight rate” was about 13% lower on January 1st than it was a year ago which represents a total of 50 basis points. But the winds have been changing as of late and while rates hit a low of 3.36% back on December 9th they have risen five of the next eight weeks and have jumped 7% to 3.6% as of last Sunday. They have settled a bit so far this week sitting this morning at 3.59%.
Year end reports continue to roll out and CoreLogic came out yesterday showing that real estate prices had risen during 2012 in 46 of 50 states with an average increase of 8.3%. Historically low interest rates coupled with increasing prices is fueling the demand with buyers who are now seeing some urgency to act. Here in Jupiter we saw median prices in 2012 jump 11% for the year with sales also increasing 11% over those in 2011.
New construction communities are once again not only viable, but thriving. Buyers are seeing banks list foreclosures at higher prices and with the poor condition of many of these homes are choosing other options. So let’s check in on the absorption rate in Jupiter and the surrounding communities to see what has changed since the last numbers we published.
Absorption rate in Jupiter – 7.93 months down from 7.95
Absorption rate in Hobe Sound – 9.7 months up from 9.25
Absorption rate in Palm Beach Gardens – 10.58 months up from 8.55
Absorption Rate in Tequesta – 11.43 months up from 11.22
Last month we had three of our reporting municipalities show lower absorption rates with the average absorption rate sitting at 9.24 months. This month things switched around with three municipalities showing higher absorption rates with the average jumping to 9.91 months. We move next in this months report to the absorption rate in Jupiter which is the only town showing a decrease over the past 30 days. This is the 9th straight month of the absorption rate in Jupiter staying in a very tight range. A decrease in sales numbers coupled with a significant decrease in inventory brought the absorption rate in Jupiter to 7.93 months down from the 7.955 we reported last month. With this decrease we stayed below the 12 month average which sits at 8.89 months. From a “seasonal” perspective we were far better off than our year ago numbers when we reported 13.35 months.
Besides our beaches and bars being filled to the brim this month the best news for local real estate is February is when home search activity in the state at it’s highest level.
Sunny skies ahead ………