Absorption rate in Tequesta drops by 27.5% to new 7 year low
Having just reported another positive month for home sales it is amazing the strength the local real estate market continues to show. Interest rates on the rise; so what. Inventory declining month after month after month; yawn. Buyers remain active and so far there has not been a single number that would show a solid change in direction. Here in Palm Beach County the median days on market for all listings is down an amazing 41% from last year’s numbers.
Supply and demand dictate prices and we are seeing steady demand with supply that is of concern. Builders locally have no inventory and we are months and month away from any new developments. Longer term the lack of supply is an even greater concern as there is little undeveloped land in northern Palm Beach County so unless something changes to drastically reduce demand we are in for prices that will continue to climb. And those increases could be very significant. The overall national and international economic picture will certainly play a role but projecting what could happen is a lesson in futility.
National numbers were published last week that pending sales had slipped a bit but we are not seeing any significant changes here locally. Nationally home prices were up 12.1% from year ago numbers with most projections showing double digit increases anticipated for the 2013 calendar year. It would be a fluke if we did not exceed all national numbers here on the local level.
Sales have stabilized at higher levels, inventory levels seem to be stabilizing at 7 year lows and prices continue to climb. One of the most important numbers to watch in any market is the absorption rate and each month at this time we take a look at those numbers in Tequesta and the surrounding communities. The trend of these numbers shows buyers what they can expect in choices when they start shopping for the perfect Florida 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 Tequesta and the surrounding communities to see what has changed since the last numbers we published on August 8th.
Absorption rate in Jupiter –
Absorption rate in Tequesta – 6.03 months down from 8.14
Absorption rate in Palm Beach Gardens – 6.41 months up from 5.68
Absorption Rate in Hobe Sound – 6.83 months down from 9.4
Last month at this time we reported that 75% of our reporting municipalities showed higher absorption rates with the average absorption rate sitting at 7.36 months. One month does not make a trend but four weeks ago it looked like we may have things turning a bit meaning a slow down in the recovery we have been enjoying for well over a year. So it is very nice to see things change dramatically for the better over the past 30 days. During that span we have 75% of our towns and villages show declines, mostly significant, with the average falling 18% to 6.17 months and very near a new record. We move next in this months report to the absorption rate in Tequesta where we saw a huge 26% move to the downside to a new 7 year low. A 27.5% increase in final sales numbers combined with a 5.5% drop in inventory levels brought the absorption rate in Tequesta to 6.03 months down significantly from the 8.14 months we reported last month. With this increase we remained far below the 12 month average which sits at 9.36 months and also below our year ago numbers when we reported 16.5 months.
It seems like this runaway real estate recovery train wants to keep running. Fins up ………….