Absorption rate in Palm Beach Gardens sits at 6.09 months
Memorial Day is in the rear view and that means summer has arrived in South Florida. Buyers are hoping that inventory levels of homes available for sale increase as many are frustrated at the lack of choice available in today’s markets. What was a fever will heat up even more if interest rates do not back off from the increases we have seen over the past couple months. As of this morning the average overnight rate on a 30 year fixed mortgage sits at 3.75% which is up almost 10% from where we stood just 3 short weeks ago. After three straight weeks to the upside most are looking for those rates to back off a bit this week and time will tell.
Each month at this time we take a look at the absorption rate in Palm Beach Gardens and the surrounding communities as the trend of these numbers shows buyers what they can expect in choices when they are heading out to look for a home. We base this number on how long it will take the market to absorb all of the homes on the market if sales levels over the prior 30 days remain constant and no other listings are added to the market. We look at the absorption rate which includes pending and contingent listings as it gives us a truer picture than the inventory level which eliminates those listings. The absorption rate will always be higher than the inventory level.
The amazing recovery we have been experiencing continues with fantastic sales again in April even with inventory levels that continue to fall. How long the housing market can carry the entire economic rebound on it’s shoulders without pulling back remains to be seen. While home prices are still well below the levels we hit at the height of the market that spread is narrowing and there is some debate as to if we are heading straight for another bubble. As long as the overall labor market numbers stay weak and with still elevated levels of foreclosures hiding in the shadows those concerns remain real. Just last week the Fed showed signs that there aggressive program of quantitative easing may be pulled back at some point and that is one of the main reasons we have seen a spike in interest rates. But for now the local real estate market continues to race along at full steam.
All along the Fed has stated that they will continue to but government bonds to artificially keep rates at the historic low levels we have become accustomed to. That is until Bernanke’s remarks of last week. Any change in that policy, which has the Fed buying $85 billion in treasury and mortgage bonds, can have sweeping effects on the real estate market, here and throughout the rest of the country. Most signs point to September meeting of the Fed as the earliest any reduction in these purchases come to fruition and they would probably start with a small reduction to see just how the markets do react. But keep a close eye on interest rates which have spoiled buyers over the past few years.
So without further adieu 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 Palm Beach Gardens – 6.09 months down from 8.93
Absorption rate in Jupiter – 6.64 months up from 6.07
Absorption rate in Hobe Sound – 7.55 months up from 6.39
Absorption Rate in Tequesta – 9.11 months up from 7.47
Last month we once again had all four of our reporting municipalities show lower absorption rates with the average absorption rate sitting at 6.5 months which was the lowest level we have seen in over 7 years. This month we saw a reversal in this trend as 75% of reporting cities showed an increase in the absorption rate with the average jumping 13% to 7.35 months. We move next in this months report to the absorption rate in Palm Beach Gardens which bucked the local trend with a very strong reporting month. We saw a huge 32% move to the downside and a new record low since the real estate bubble burst. A huge 39% increase in final sales numbers coupled with a 5% decrease in inventory brought the absorption rate in Palm Beach Gardens to 6.09 months down from the 8.93 we reported last month. With this increase we stayed far below the 12 month average which sits at 8.57 months and also well below our year ago numbers when we reported 8.31 months.
Keep a close eye on interest rates and our May sales numbers which will be published in the coming days.
Fins up until June ………….