After 2 Straight Declines Real Estate Absorption Rate up Slightly in Palm Beach Gardens

Absorption rate in Palm Beach Gardens sits at 9.18 months

May has arrived in South Florida and the dynamic real estate market shows no signs of slowing with inventory of well priced homes continuing to fall. Sales have been spectacular and pricing pressure remains firmly to the upside. If you happen to be looking for a home anywhere in Palm Beach and Martin Counties you know all too well how difficult that task can be.

The overall economic picture remains somewhat unsettling with signs that it may be weakening; even the Fed in their statement this week said fiscal policy is restraining economic growth. Concern that tax increases and spending cuts are slowing any growth in the economy is growing. The last jobs report was plain dismal with only 88,000 jobs added in March compared to the pace of 220,000 we had been accustomed to. How long the real estate industry can lead the economy is yet to be seen but there is little doubt that it cannot continue unabated without other industries picking up some steam.

One thing is certain and that is the current boom started with investment grade property purchases and they have been the driving force behind increased prices. As real estate prices rise, projected returns fall and investors will start looking at other options when deciding the best place for their money. There are signs of rental properties taking longer to fill up in some communities and this too effects overall return. As projected returns drop so will demand.

So far home buyers have not pulled back and demand for well priced properties remains extremely strong. In Florida the consumer confidence rating improved for the 2nd straight month seemingly unaffected by the concerns the Fed has about tax increases and spending cuts. All one has to do is look at the latest Case-Shiller reports that show the highest real estate price appreciation rates since 2006 with all cities in the survey posting year over year gains for the second straight month. Half of these communities posted very strong double digit returns. Home “flipping” is once again coming back as are lotteries at new home communities.

Locally the Palm Beach County year over year numbers are staggering with inventory down 43%, sales up 12.2%, average sales price up over 31% and pending sales up a more than impressive 67%. So like the oncoming summer weather the local real estate market is hot, hot, hot but keep a close eye out for changes and look carefully at the metrics in any community whether you are buying or selling. Just like the weather all real estate is very local and ever changing.

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.

Gardens

Absorption rate in Jupiter –
Absorption rate in Hobe Sound –
Absorption rate in Tequesta –
Absorption Rate in Palm Beach Gardens – 9.18 months up from 8.67

Last month we had all four of our reporting municipalities show lower absorption rates with the average absorption rate sitting at 8.995 months. This month this downward trend continued as the inventory level of homes declined further and sales were robust. Over the past 30 days 75% of our reporting municipalities showed further declines in the absorption rate with the average rate now sitting at 7.375 months for a huge reduction of 18%. We start off in this months report with the absorption rate in Palm Beach Gardens where the absorption rate bucked the overall trend and made a 6% move to the upside. A slight decrease in final sales numbers coupled with a 1.5% increase in inventory brought the absorption rate in Palm Beach Gardens to 9.18 months up from the 8.76 we reported last month. With this increase we stayed just above the 12 month average which sits at 8.78 months but were below our year ago numbers when we reported 10.4 months.

Watch for the overall economic picture and the booming real estate market to butt heads in the coming months.

Fins up until June ………….

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Published by

Tom Priester

After spending years among the top individual performers at one of Palm Beach County’s largest and most successful real estate brokerages, Tom Priester knew there was another way to do real estate. A better way. Real estate services focused on the customer. Like the old days when the customer truly was #1. He tired of listening to why he should be going out to have his customers sign one sided buyers’ brokerage agreements. He tired of hearing how he should be selling customers why paying higher commissions, like 7% and 8%, was to their benefit. He tired of hearing how he should sell his clients on why they should be paying hundreds of dollars in additional “transaction fees”. The business had slid way too far from being focused on the customer. His customer. So he decided the time was right to be different…..by design. To start his own unique boutique real estate firm truly focused on his customers. They will now have access to a process focused on them. Only the best marketing techniques to sell their homes. No cutting corners. Commission structures based on his clients needs not his. Paradise Sharks was born out of Tom’s passion to return this business to the customer. Where it belongs. If you want a real estate experience that benefits you, just give Tom a call at 561 308-0175 or send him an e-mail at tom@paradisesharks.com. You can always pay more and receive less but that just would not make any sense. Would it?

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