Absorption rate in Jupiter Drops for 3rd Straight Month
As we enter into a New Year everything here in the South Florida Real Estate market looks picture postcard perfect. Even though not all market segments have experienced the robust recovery, overall things just keep getting better and better for property values. Buyers may be frustrated with the lack of quality inventory but sellers and home owners rejoice as their property finally is going up in value after seven years of declines.
Some analysts have gone as far as saying the market has hit bottom and is now in full recovery. Zillow put out their study that showed prices in 2012 were up 4.6% across the nation and are predicting another 3.1% jump this year. CoreLogic has topped that with a prediction of a 6% increase in median price this year. Many neighborhoods in Northern Palm Beach County are putting those statistics to shame with solid double digit gains since this time last year.
I am not sold on the full recovery bandwagon and while real estate has been leading the economy in growth how long can we go it alone? While “shadow inventory” is showing declines of 12.3% over the past 12 months there are still a large number of people seriously delinquent on their mortgages. Our debt ceiling is staring us in the face and talk of a trillion dollar coin shows us that the spending party in Washington continues with no real thoughts of getting our financial house in order. Who knows how this alone may factor in this year especially as it relates to interest rates that remain at ridiculously low numbers.
Locally sales of single family homes under about $400,000 are selling like hotcakes, inventory of condos in the best locations and buildings continue to decline and investors are snapping up income producing properties faster than we can put them on the market. But ignoring other market factors would be a mistake; just ask anyone trying to sell a home in many of our private golf clubs. There are pockets of problems as I can show you one neighborhood just blocks from our office in central Jupiter where an incredible 40% of all homes are on the market. Still sales are up, inventories are down and there are smiles all around in most real estate offices in this neck of the woods.
Every month around this time we take a deeper look at the absorption rate of local markets as this gives us a glimpse as to where the market is heading. The absorption rate is simply the total number of months it would take to absorb all of the existing inventory if sales remained constant based on the most recent 30 day period. After seeing dramatic drops earlier in the year absorption rates have solidified over the past few months. Let’s now take a look and see if there have been any dramatic changes in absorption rates as of December 15th.
Absorption rate in Jupiter - 8.10 months down from 8.19
Absorption rate in Palm Beach Gardens - 8.61 months down from 9.48
Absorption rate in Hobe Sound - 11.68 months down from 13.18
Absorption Rate in Tequesta - 11.71 months up from 9.46
Last month we had three of our reporting municipalities show lower absorption rates with one showing an increase. The strength of a market can change quickly and the “average” absorption rate for our four reporting municipalities, after a slight decrease last month, again showed improvement. Once again it was a slight decrease to 10.025 months from 10.0775 months but buyers are keeping active offsetting higher prices with historically low interest rates. We move next in this months report to the absorption rate in Jupiter which is the third municipality showing a decrease this month. An slight decrease in sales numbers coupled with a bigger decrease in inventory brought the absorption rate in Jupiter to 8.10 months down slightly from the 8.19 we reported last month. With this decrease we remained below the 12 month average which sits at 9.37 months. From a “seasonal” perspective we were far better than our year ago numbers when we reported 13.01 months.
With our northern visitors here for a few more months expect more strength ahead.
Welcome to 2013 .........