- November 25, 2024
-
-
Loading
Loading
With sales still being reported, May home and condominium sales in Flagler County already surpass those of May 2010. I’m beginning to smell chum in the water. The ingredients for a turnaround are becoming more apparent. What do I see?
The bad news
On the credit side, low interest rates have not translated into available credit. The home finance market, including the appraisal industry, is simply too paranoid to return to normal underwriting standards. I don’t expect that fact to change until the industry, the government and the courts sort out the foreclosure documentation mess.
Even those with good credit ratings still find it difficult to get a home mortgage. Those looking for condominium financing face an even greater challenge. Many lenders simply will not underwrite a mortgage in developments where too many owners are in foreclosure or delinquent on association assessments.
Half of all May home sales were reported as cash sales. More than 90% of May condominium sales were paid with cash. Homebuilders tell me that many of their customers are paying for new homes with cash. Those that borrow are putting down large deposits because appraisals are coming in below construction cost.
The good news
As long as buyers assume it’s a buyers’ market, they feel no sense of urgency. They believe the bargain they pass on this month will be replaced by a comparable bargain later.
Prices are slightly lower than last year, but inventories continue to shrink, gradually limiting choices. For the first time in years, the number of single-family Flagler County homes listed for sale through the Multiple Listing Service is less than 1,200. It once exceeded 2,600.
Once potential buyers begin to believe that bargains are becoming scarce, demand and price will rise. At the current sales rate, Flagler’s home inventory represents about eight months of supply. This is only slightly above what most industry analysts believe is a normal market —between four and seven months.
Another indicator of an improving market is days on market. April’s median was 106 days on the market, compared to 180 last April. May’s is 110. It was 152 a year ago.
Yes, inventory is down, but that means little if there is no demand. Sales contracts are the final piece of the puzzle. Increases in pending and contingent contracts signal that demand is strengthening. In early May, there were 1,229 homes listed; 492 were under contract. By month’s end, inventory had dropped to 1,179, while contracts rose to 524.
