Absorption Rate in Palm Beach Gardens Improves Slightly
There is plenty of good news that still surrounds the real estate market both locally and on a national basis. Interest rates declined by the largest one week move in 6 months last week and while the cost of borrowing money declined the frustration level of buyers seeking that perfect home continued to increase. Finding the right home to purchase at the right price is a lesson in futility as well priced new listings are met with a parade of Realtors® with their clients in tow as sellers continue to get lightning quick offers at prices well above what they could have expected a few months ago.
There are signs that the investor market is starting to cool a bit and we are seeing rental properties in many areas taking longer to find tenants with increased inventories. It will probably take a while for these metrics to catch up with investors when deciding to make offers and while the percentage of investor purchases is dropping they still are at historically high numbers accounting for almost 1 in 4 purchases nationwide. A trend to watch but expect that investment grade properties will continue their pace with first time home buyers finding a bit more success when bidding against investors.
Just how high prices will be driven by the current market is yet to be determined but many signs point for 2013 appreciation to be higher than the tremendous gains we saw in 2012. Homebuyers are learning that they have to make stronger offers to be successful and inventory levels of well priced homes continues to be a significant problem. Builders are picking up the slack but in many areas locally they are also quickly running into inventory problems with few buildable lots ready to go in many areas of the north county region. Add on the facts that the cost of construction materials continue to rise and builders are actually finding that skilled craftsmen and labor is not an easy task. Bullish signs for prices to continue to climb are everywhere one looks; if demand continues. However, there are many macro-economic issues like jobs and national debt that continue to hang like a dark cloud overhead.
Buyers without a well crafted game plan and the ability to be immediately notified of, and react to, new listings are left on the outside looking in. Those who have accepted the fact they are not going to find the “perfect” home and are willing to make a strong offer still can be successful with the proper guidance. All one has to do is look at prices in new home communities where some builders have raised prices as much as 25% or more over the past 8 months to see what is happening in the market.
The absorption rate is a very important metric when looking at the strength of the real estate market and paints a picture 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. The importance of these numbers cannot be overstated so let’s check in on the absorption rate in Palm Beach Gardens and the surrounding communities to see what has changed since the last numbers we published.
Absorption rate in Hobe Sound –
Absorption rate in Palm Beach Gardens – 8.67 months down from 8.81
Absorption rate in Jupiter – 9.3 months down from 9.83
Absorption Rate in Tequesta – 9.47 months down from 12.12
Last month we had two of our four reporting municipalities show higher absorption rates with the average absorption rate sitting at 9.88 months. This month things changed significantly as the inventory level of homes declined adding more frustration for potential home buyers. In each of our reporting municipalities the absorption rate declined over the past 30 days with the average rate now sitting at 8.99 month or a decline of 9%. We next move in this months report to the absorption rate in Palm Beach Gardens where the absorption rate made a 2% move to the downside. No change in final sales numbers coupled with a small decrease in inventory brought the absorption rate in Palm Beach Gardens to 8.67 months down from the 8.81 we reported last month. With this decrease we fell slightly below the 12 month average which sits at 8.88 months but were much further below our year ago numbers when we reported 12.51 months.
Whether you are selling or buying you need to carefully evaluate all of the data surrounding the value of any property so you can either price or bid accordingly. With the spring buying season in full swing and buyers looking at higher prices it is going to be interesting once again.