Why Flagler’s Home Prices Were Slow To Recover And Why That’s About To Change

New home construction has not been enough to absorb Flagler’s growing population, but unoccupied distressed homes covered the construction deficit. Now that secondary source is quickly disappearing.

PALM COAST, FL – June 2, 2016 – I was quoted in a June 2011 article <story> in the Washington Post saying, “Flagler County is the poster child for what went right and what wrong in the economy.” Flagler was the housing bubble on steroids. For two years running, Flagler County and Palm Coast respectively were the fastest growing county and city in the U.S.

Flagler’s housing bubble led the rest of the nation with prices rising sooner, rising higher (in percentage terms), peaking sooner, falling more precipitously, and bottoming at a lower level. The median selling price for a single-family home fell more than 60%.

But Flagler’s housing market did not lead the nation’s recovery. Recovery has been slow. Home sales began to rise again in 2008, but prices continued a downward slide until 2012 before turning upward again. While other regions have rebounded to pre-recession highs, Flagler County median home prices remain roughly 20% below the 2005 peak of $259,950.

The Housing Bubble and Recovery in Flagler County

Flagler’s housing bubble was driven primarily by investors and speculators, not by an underlying demand for housing. The investors/speculators did not plan to occupy the home. They simply planned to turn around and sell the property at a profit to the next person in line. When the bubble burst, Flagler was terribly overbuilt. Spec homes dotted the landscape. This bloated inventory of unoccupied homes and condos became the source for the short sales and foreclosures of the next several years. From 2009 through 2011, distressed home sales accounted for more than 50% of all home sales in the county.

Flagler’s population has continued to grow, expanding by 10% between 2010 and July 2015. And the population growth rate is accelerating. A recently released U.S. Census Bureau report estimates the county added 2,831 new residents between July 2014 and July 2015, a 2.76% gain. That was enough to place Flagler 64th on a national list of fastest growing counties with populations over 100,000.

When planning for growth, the Flagler County School District estimates 2.33 residents per household. (The national average is 2.54, but Flagler has more retirees, thus fewer children). Therefore, adding 2,831 new residents creates a need for an estimated 1,215 new residential units (condominiums, homes, apartments). Yet, new home construction has not kept up the pace. Only 545 residential building permits were issued during 2014 and 583 in 2015. Building permits are on track to total more than 600 and perhaps even 700 units in 2016, but Flagler will have created a need for another 1,248 residential units with the July 2015 to July 2016 estimated population gain (based on the same 2.76% rate as July 2014 to July 2015.)

The Drop in Distressed Home Sales Drives UP the Housing Deficit

Two questions come to mind:

1. Where are all these new arrivals living, since not enough new homes have been built?
2. Assuming continued growth, where will future arrivals settle?

Move Out – Move In

When one family moves out and another moves in, there is no increase in population, therefore no additional residential units are required. New additions to the population have to find an unoccupied home; and at a rate of one home for each 2.33 net additional residents. The inventory of unoccupied homes consists of new construction, foreclosures and vacant short sale units. The following graph illustrates a new construction deficit over the most recent six years. Data for the year ending July 2016 is estimated.

Now Home Construction Is Increasing, But So Too Is Flagler's Population

The deficit shown in the chart did not translate into rapid price increases because there was a continuing supply of unoccupied distressed properties to take up the slack. Home sales were brisk, but median prices in the Flagler market rose more gradually than in many other regions.

Short sales have been in decline for many months, becoming an irrelevant sector several months ago, but Florida’s judicial foreclosure system continued to feed additional properties into the unoccupied foreclosure inventory; until recently. The graph shows the dramatic change in product mix since January 2015, when distressed sales accounted for 31.2% of all home sales.

Foreclosure Sales No Longer Cover The New Home Construction Deficit

The well is nearly dry. There will be an insignificant level of distressed inventory going forward, leaving new construction as the only option for Flagler’s growing population. If new construction can keep up the pace, price increases will be more moderate. To the extent that an inventory deficit remains, the excess of population-driven demand over supply will accelerate price increases.

Local builders complain about the shortage of skilled and unskilled construction workers, even at the current rate of construction. There is no short-term fix to the labor problem. Labor shortages will continue to exacerbate the construction deficit in the near future, accelerating the pace of rising prices. As home prices rise, so too will rentals.

The dramatic drop in distressed home sales and the concomitant increase in traditional sales is sustainable. In May, distressed sales accounted for only 5.5% of all home sales and only 4.0% of total sales value. But what about the pipeline. 769 single-family Flagler County homes are currently listed for sale through Flagler MLS. Only six are short sales and ten are foreclosures, totaling only 2% of total listings.

There has been some concern that home sales have dropped off somewhat from one year ago. The concern is not surprising. We have gotten used to monthly year-over-year gains in home sales, but in five of the past seven months, home sales have dropped year over year.

Through May, total home sales in 2016 are off 7.0% (66 homes) from the same period one year ago. But distressed sales during the same periods dropped from 227 to 95 (58.1%). Disregarding distressed sales, traditional sales have increased over the first five months of 2016 by 9.3%. The dollar value of traditional sales increased a very healthy 15.7% over the same period.

Source:Gotoby.com

PALM COAST — Palm Coast Arts Foundation officials aren't modest about how they see a groundbreaking Thursday.

“Come to the biggest groundbreaking event in Flagler County history!” urges the Foundation's flier, a call-out for residents to attend a ceremony to mark the beginning of a project that will level, grade, landscape and irrigate five acres in Town Center, then plant a roofed outdoor stage on them.

Nancy Crouch, the foundation's executive director, said the $400,000 project has been years in the making and will kick off a much larger, multi-phased project that eventually could total more than $67 million.

A rendering of the project shows a large, lush lolling area in Town Center, full of green grass and defined by borders of trees. The wedge-shaped space is helmed by the stage.

"We hope to have the first phase completed by our signature event — (May's) Picnic and Pops with the Jacksonville Symphony," Crouch said. "It's a big, huge deal. We sell out every single chair and table we have and now we have a much bigger space to fill."

That means crews have until April to finish the job.

"It will be freshly sodded and it has to sit for a few weeks," Crouch said. "We're kind of on pins and needles, but we have a backup plan."

She said the Picnic and Pops, for which 40 tables for 10 have already been claimed, will inaugurate the stage.

Beau Falgout, administrative coordinator for the City of Palm Coast, said officials "are excited about the groundbreaking of the phased Palm Coast Arts Foundation project."

He said the public-private partnership — the city leases 14 acres in Town Center to the foundation — is making the project a reality and could help Palm Coast grow.

"This project, along with our existing art groups and cultural facilities, will not only provide art and cultural opportunities for our existing residents, but will help in attracting visitors and future residents to Palm Coast," he wrote in an email.

Preparing a 5-acre outdoor venue site is phase one of a project to construct an arts foundation park, with progressively bigger construction projects. Installing and roofing the outdoor stage is phase two. 

Phase three is when things begin to get more ambitious. It's to feature a 19,000-square-foot events center with a full-sized catering kitchen, "hopefully for someone who wants to take up residency there," she said.

The cost? About $7 million. Crouch has lots of confidence in the project.

"We already have people in the area who want to rent space and it hasn't even been built yet," she said.

Meanwhile, foundation members are seeking grants and planning private fundraisers.

"We've got another grant pending with the state," she said. "We should hear about it soon."

It depends on fundraising, but Crouch hopes to begin phase three in four years.

Phase four could take up to 10 years, but the payoff is a $60-million performing arts center.

Crouch said the master plan calls for 2,200 seats for the center, three stages and an area for art galleries.

“By then we will have lots of practice (fundraising and getting grants)," she said. "And there's all kind of naming opportunities out there. If people want to put their name on something, it's available. We have had some corporate proposals.”

More information, including a virtual tour of the project, is available online at palmcoastartsfoundation.com

Watch the video here! https://vimeo.com/126547285

74 Percent of Florida Home Sellers Hire First Agent They Meet

Just-released 2015 Profile of Home Buyers and Sellers Florida Report

By Toby TobinAdd a Comment

ORLANDO, Fla. – January 28, 2016 – According to the just-released 2015 Profile of Home Buyers and Sellers Florida Report, three out of four home sellers (74 percent) contacted only one real estate agent before agreeing to list their home for sale.

In addition, 74 percent of Florida sellers said they recommended that agent at least once to family or friends after the deal closed.

On the buyer side, two out of three (66 percent) interviewed only one real estate agent before agreeing to work with him or her.

Survey highlights

Florida sellers and real estate pros

88% of sellers listed their homes on a Florida Multiple Listing Service (MLS)

83% of Florida agents receive their compensation predominantly from sellers

74% of sellers referred another potential seller to their agent three or more times after the sale

76% said that they would definitely recommend their agent for future services; 11% said they would "probably" recommend

Florida buyers and real estate pros

83% percent of recent Florida buyers purchased their home through a real estate agent or broker

59% worked with an agent to help them "find the right home" – the top reason for working with an agent

36% of buyers used an agent referred to them by a friend, neighbor or relative

89% would use their agent again or recommend their agent to others

Florida homebuyer characteristics

25% in Florida were first-time buyers

The typical buyer was 41 years old with a median income of $80,100

65% of recent Florida buyers were married, 16 percent single females, 9% single males and 7% unmarried couples

15% of buyers purchased a multi-generational home to take care of aging parents or because children over age 18 moved back in

89% percent of recent buyers identified as heterosexual and 5% as gay or lesbian

25% of recent buyers were veterans – 2% are active-duty service members

The primary reason for purchasing: A desire to own a home of their own (23%)

Characteristics of Florida homes purchased

22% bought a new home; 78% bought a previously owned home

Top reason to buy new: Avoid renovations and problems with plumbing or electricity (36% of new home buyers)

Top reason to buy an existing home: A better overall value (34%)

81% of Florida buyers chose a detached single-family home

20% bought senior-related housing

Median distance between a buyer's old and new home in Florida: 25 miles

The median home selling price was $202,000 – 97 percent of the asking price

The typical home was 1,860 square feet and built in 1998

Florida buyers expect to live in their homes a median of 15 years

Buyers' home search process

In Florida, 37 percent of buyers first searched online for for-sale properties; 15 percent started the process by contacting a real estate agent

79% of recent Florida buyers considered their real estate agent to be a very useful information source; 77 percent found websites very useful

Florida buyers searched for 10 weeks and looked at 10 homes

Florida buyers who did not search the Internet looked at four homes over six weeks

Internet searchers cited photos (86%) as useful in their home search process

58% were satisfied with the process

Florida home sellers

The typical Florida home seller was 62 years with a median income of $89,200

Top reasons Florida sellers sell: retirement (17%), the desire to move closer to friends and family (14%) and job relocation (12%)

Florida sellers typically lived in their home 11 years

87% of Florida home sellers worked with a real estate agent

The final sales price was a median 97 percent of the final listing price

Recently sold homes were on the market a median of six weeks

32% of Florida sellers offered incentives to attract buyers

Florida sellers said they sold for a median $48,000 above the price they originally paid for the home

61% were very satisfied with the selling process

For-Sale-by-Owner (FSBO) sellers

10% of Florida home sales were FSBO. Nationwide, NAR found FSBO sales at their lowest point since recordkeeping began in 1981

In Florida, the typical FSBO seller is 65 years old; 77 percent are married with an income of $82,500

In Florida, the median FSBO selling price was $200,000

Florida FSBO homes sold in five weeks, though weeks-on-market may be lower because some FSBOs sell to a buyer that the seller already knows

The complete 2015 Profile of Home Buyers and Sellers Florida Report can be downloaded through Florida Realtors website. Visit the "Other Research Reports" page under the "Research and Statistics" link.

© 2016 Florida Realtors®. All Rights Reserved. Reprinted with permission.

July Best Month for Flagler County Home Sales in 9 Years

The total value of single-family Flagler MLS home sales exceeded $50M, the highest level since June 2006 and 502% above the January 2009 low.