Absorption rate in Palm Beach Gardens Improves by 6%
It has been 13 days since we reported the latest real estate sales numbers in the northern Palm Beach County region and we are starting to see shrinking inventory affect sales. With 60% of our reporting municipalities showing slower sales and pending sales down across the board we have to ask ourselves is the market changing?
Are slowing sales only due to lack of well priced inventory for buyers to choose from or is demand weakening a bit; a little too early to tell. But there is certainly not a lack of news that will have serious effects on the strength of the market moving forward. Interest rates have seemed to steady a bit off of their recent highs but the hint of the Fed starting to slow their monthly purchases of our debt has Wall Street nervous. Not only have interest rates increased but so have closing costs for those taking out a mortgage to fund their purchase. Over the past year fees to borrowers with excellent credit and a 20% down payment have risen 6%.
With required down payments to obtain the best rates increasing borrowers are turning back to adjustable rate products where current interest rates look favorable. But if the Fed does start slowing their monthly purchases and rates start to jump many of those will be wishing they had made another decision. And just this week in President Obama’s various appearances much focus was on housing and the word that both Republicans and Democrats are working on legislation to end Fannie Mae and Freddie Mac. With bipartisan support you can bet that the role these two agencies have played in the lending markets will change dramatically.
Home prices have continued to rise but those increases are at a slower pace and we are seeing more price reductions on active listings. Locally, especially in the Jupiter area, we are quickly running out of places to build with Buz DiVosta, not to be confused with Pulte DiVosta, takes his plan for 300 acres just north of Indiantown west of the Turnpike to the Town of Jupiter. The 1st reading for this plan will be held tonight at 7:00 PM in the town hall council chambers. With DiVosta’s plan calling for higher density on smaller lots there is plenty of opposition. At 300 acres the development is slated for one of the largest undeveloped parcels available in the area. Once these larger parcels are gone, future supply of new homes will dwindle and with demand from a growing base of international buyers and baby boomers look for higher prices ahead.
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. 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 on July 9th.
Absorption rate in Palm Beach Gardens – 5.97 months down from 6.34
Absorption rate in Jupiter – 6.47 months up from 5.23
Absorption rate in Tequesta – 8.43 months up from 6.94
Absorption Rate in Hobe Sound – 10.74 months up from 7.02
Last month at this time we reported that 75% of our reporting municipalities showed lower absorption rates with the average absorption rate sitting at 6.53 months. While we were near multi-year lows things changed around this month with 75% reporting increases in the absorption rate and those jumps were substantial. Over the past 30 days we saw the average jumping 20% to 7.9 months which is the highest average we have seen in quite some time. We next move in this months report to the absorption rate in Palm Beach Gardens a shining star showing a decrease in a month when all neighboring communities suffered increases. We saw a healthy 6% move to the downside bringing us ever so close to a new 7 year low. A 3% decrease in final sales numbers was offset with an 9% drop in inventory levels brought the absorption rate in Palm Beach Gardens to 5.97 months down from the 6.34 months we reported last month. With this decrease we remained far below the 12 month average which sits at 8.22 months and also well below our year ago numbers when we reported 8.8 months.
With sales slowing, pending sales weakening and continued inventory problems things in the Palm Beach County real estate market remain very, very interesting…..
Fins up ………….