Absorption rate in Tequesta sits at 7.47 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 Tequesta and the surrounding communities to see what has changed since the last numbers we published.
Absorption rate in Jupiter –
Absorption rate in Hobe Sound –
Absorption rate in Tequesta – 7.47 months down from 9.47
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 move next in this months report to the absorption rate in Tequesta where we saw a significant 21% move to the downside. A 20% increase in final sales numbers coupled with a 5% decrease in inventory brought the absorption rate in Tequesta to 7.47 months down from the 9.47 we reported last month. With this decrease we moved far below the 12 month average which sits at 10.75 months and also well below our year ago numbers when we reported 9.88 months.
Watch for the overall economic picture and the booming real estate market to butt heads in the coming months.
Fins up until June ………….