Sales for the month of June were about average with 21 properties closed (SF-9, Con-9, Dup-0 & Lot-3) compared to 30 closed (SF-22, Con-5, Dup-3 & lot-0) in June of 2008. Year to date through June we are still running behind the same period in 2008. As you can see from the charts on my web site, sales for June 2009 Y-T-D was 106 versus 140 for June 2008 Y-T-D. In comparing the last full 12 month sales to the 12 months ending the end of 2008 you can see that average and median sales prices are down in single family and condos but seem to have stabilized in the duplex and lot type properties. Because we are on an island, average and median sales prices aren’t as good a measure of the value of a property because of the high land cost (the lot value is about ¾ of the sales price). If there are an unusual high number of sales on or near the beach it will skew these numbers up and if there are an unusual number in the middle of the island it will skew the number down. The best method of determining value is comparing properties in the same general location even if the houses on them are in completely different condition because that can be adjusted more easily then the location. From a good news standpoint the number of properties under contract continues to be strong with 46 currently under contract (SF-26, Con-18, Dup-2 & Lot-0). Looking at distressed properties, (short sales, pre-foreclosures, in-foreclosure & bank owned) they continue to be under 5% which also is a good sign. Until all the distressed properties are purged from the market we won’t start seeing any appreciation.
A good sign in the market is that the inventory (property for sale) continues to decline on the island. The current inventory is at 548 (SF-277,Con-187, Dup-41 & Lot-43) down from 575 last month at this time. As you can see on my website from the inventory vs. absorption rate chart we have less then 2 years inventory on the market. As I mentioned several times in the past, the normal inventory for the island is in the mid to high $400K’s or about 2 years inventory based on the normal absorption rate so we’re in the norm now.
The biggest impediment to sales right now is the banks. Buyers once viewed as perfectly qualified are being denied mortgages (see the New York Times article – Abundance of Caution Dampens Home Sales). Even though it hasn’t affected us on the island as much as the mainland, it still has caused some contracts not to close which in normal times would. The other half of the bank problem is appraisals. Because of the overly strict guidelines for appraisals such as appraisers can only use properties sold in the last 3-6 months, getting properties to appraise has become a problem. Because there are not many properties sold (about 18-20 a month) many times the appraisers are using properties that are no where near comparable and in some cases on Longboat or Lido Key. These things have made it much more difficult to close contracts where buyers and sellers have agreed on price and terms.
Mortgage interest rates are still at an all time low. They had gone up some at the beginning of May and just recently dropped back down again into the low 5’s for a 30 year fixed rate. We are still in a very volatile market and interest rates will not be this good forever. The 40 year average for a 30 year fixed rate is 7.5% and it’s a real possibility that we will see rates in this range in the next year or two.
For those of you who are looking to take advantage of this market to buy property on the island, now is certainly the time. Check out Frank & Al’s great buys for some great values both in Entry level properties and Luxury properties. As far as entry level; properties the short sale at 312 64th St is a great value and who knows what you can get it for. Another good value is 105 Mangrove, one house from the Gulf and listed at what other west of Gulf Drive properties have recently sold at. 200 & 202 38th St are listed at $200K under the sales price per sq ft of properties sold with a gulf view in the last 6 months.
To summarize the market, the inventory continues to fall and is close to the norm. Number of sales on the island is also in the normal range and prices are creeping down to what looks to be a bottom.