A feeding frenzy is developing at the low end of the housing market. September real estate sales numbers continue to trickle in, but it’s clear the September median selling price for Flagler homes, sold via the Multiple Listing Service, was down compared to August 2011 and September 2010.
The median home selling price (half sold above and half below) is a better measuring stick than the average price. It is less affected by the addition of a single high- or low-value sale. But it’s not perfect. Median price reacts to changes in overall prices but also to changes in the mix of properties being sold.
Fewer than 10% of Flagler County homes sold for prices higher than the nearly $260,000 peak in January 2006. September’s $105,000 median sales price is nearly 60% off that peak.
The term “feeding frenzy” also applies for homes that are being sold by lenders after completing the foreclosure process. Thirty-six homes in this category were sold (closed) through MLS in September. The median “days on market” was a scant 34.5 days.
There are only 47 lender-owned homes currently available for sale, representing an absorption rate of only 1.3. That means there is barely more than one month’s supply at current prices. Lender-owned sales have spawned bidding wars, driving the median selling price ($91,450 for that category) above the median asking price ($90,325).
The absorption rate is a strong indicator of current market conditions. It’s generally believed that the absorption rate tells us if we are in a sellers’ market, a buyers’ market or a normal market.
The market is driven by the low end. It’s being driven by cash as well: 55.6% of September home sales were for cash, up from 52.2% in July and 52.4% in August. Cash sales dominated condominium transactions, at 62.9%.
I see some very positive signs. The inventory of Flagler homes listed for sale via MLS dipped to 965 during the past weekend. It was more than 1.200 just five months ago. The market is no longer crowded with inventory.
The number of building lots sold in September rose to 40 from 24 one year ago. Building lots purchases are a good indicator of plans to begin construction. Residential building permits were up 25% from one year ago, another good sign.