Absorption Rate in Palm Beach Gardens Improves by 14%
March has arrived and the local real estate market continues to evolve and change and all signs still point to the shift from buyer’s market to seller’s market continuing. The big topic of conversation is how limited inventory is affecting the market and as we reported here last week home sales in the Northern Palm Beach County were down sharply in January with most of the blame being put on limited choices for an army of buyer’s ready for the right opportunity.
As we dig into the statistics in individual neighborhoods we do see inventory but most homes are priced well above what the most recent sales in that neighborhood closed at. Still the percent of homes with price reductions is at multi-year lows which is a bullish sign on it’s own. Homes are selling quicker with days on market numbers continuing to decline with new listings coming on the market at higher prices. Demand is high and supply is low and new home communities are thriving. Sales volume of existing homes is being held back by the lack of choice available to today’s buyers who have been spoiled over the past 7 years.
Nationally the number of homes for sale is at the lowest level we have seen since 1999 and if this trend remains in force prices will continue to climb. This is fantastic news for homeowners but bad news for buyers and those of us who make our living selling real estate. The investor market continues to thrive as cash on cash returns remain stronger than other vehicles available to those with cash needing to provide them a return. Even after significant price increases in many communities quality investments producing solid 7% to 8% returns are out there and that does not include tax benefits of depreciation or future appreciation. If inflation rears it’s ugly head at some point real estate will be a beneficiary and investors holding real estate will be handsomely rewarded.
Pending sales look strong heading into the spring buying season which is another bullish sign. Still buyers are finding they must act very quickly with strong offers or be left out waiting for the next listing that meets their needs and another group of competition to contend with. Earlier this week we took a client out to look at a new listing within hours of if hitting the market. A call to the listing agent was all it took to learn that on day 1 they already had two offers and both were above the list price. This is the new norm for well priced listings in neighborhoods where demand is strong. But the market is changing and we need to adapt with it and watch for signs of change.
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 Palm Beach Gardens and the surrounding communities to see what has changed since the last numbers we published.
Absorption rate in Palm Beach Gardens - 9.06 months down from 10.58
Absorption rate in Hobe Sound - 9.31 months down from 9.7
Absorption rate in Jupiter - 10.14 months up from 7.88
Absorption Rate in Tequesta - 12.68 months up from 11.43
Last month we had three of our four reporting municipalities show higher absorption rates with the average absorption rate sitting at 9.9 months. This month things changed a bit with 2 municipalities showing higher absorption rates and 2 reporting lower rates with the average jumping to 10.3 months. No doubt the slow down in sales had a major impact so let’s look at each municipality individually to see what happened. We next move in this months report to the absorption rate in Palm Beach Gardens which also provides better news than we saw out of Tequesta and Jupiter. A nice increase in sales numbers coupled with a small increase in inventory brought the absorption rate in Palm Beach Gardens to 9.06 months down from the 10.58 we reported last month. With this decrease we stayed just below the 12 month average which sits at 9.25 months and far below our year ago numbers when we reported 13.03 months.
Whether you are selling or buying you need to carefully evaluate all of the data surrounding the value of any property so you can either price or bid accordingly. With the spring buying season just around the corner and buyers looking at higher prices it is going to be interesting once again.