2012 was big; 2013 will be bigger

Palm Coast Observer
Opinion

2012 was a good year for local real estate market. 2013 will be better.

In January 2012, I said, “At the end of the year, we will look back and say, ‘Wow.’” By every measure, 2012 was better than the preceding year. And by many measures, it was the best in years.

Homes sold

With the month’s sales still being reported, December already tallied more single-family Flagler homes sold through the Multiple Listing Service than any December since 2005. The same can be said for the fourth quarter as well as for the entire year.

Selling prices

The median home selling price for December (preliminary reporting) is $125,000, compared to $115,000 in December 2011. The median selling price was up for the fourth quarter as well as for the entire year. This is the first year-over-year increase in the median selling price since 2005.

Total sales

December represented the sixth consecutive month of an increase in the total value of all single-family homes sold year-over-year. The total value of 2012 home sales was the greatest since 2007.

Inventory

We enter the new year with only 860 single-family Flagler County homes listed for sale in the Flagler MLS, down from 1,000 at the beginning of 2012, and from more than 2,500 during the depth of the Great Recession. Real estate is a supply and demand market. All other factors being equal, a smaller inventory (supply) will tend to lead to increased prices.

Days on market

DOM is the time interval from the date a home is listed until it’s posted on MLS as a “pending” sale. A low DOM is an indication of a stronger market. DOM has declined consistently from 155 in 2009 to 63 in 2012.

Perspective

If you are waiting for prices to return to their former high, sit down, take a deep breath and reset your expectations. Since their all-time highs, the number of homes sold dropped 57% from 2,914 in 2005 to 1,254 in 2007. Back above 2,000 in 2012, the number of homes sold is still off by 31%.

Even more dramatic are the changes in median price and total sales volume. Median price dropped from $259,950 at the end of 2005 to $120,000 in 2011. While it’s nice to see median price creeping up, 2012’s median $123,000 is still 52.7% off the peak.

The total value of home sales plummeted from the 2005 tally of $792.7 million to $235 million in 2010. 2012’s preliminary total of 313.4 million remains 60.5% below 2005 levels.

Looking forward to 2013

2013 will be the year for European Village. KoKoRo and Yo Belle Frozen Yogurt recently opened there. A new deli, a Mexican restaurant (Burrito 101) and a French restaurant will be opening soon.

The number of homes sold will increase by at 15%.

The median selling price will increase by at least 5%.

Property assessments will remain about the same since assessments lag by one year: 2013 assessed values will be based on property sales in 2012. Therefore, taxing jurisdictions will have another year of wrestling with millage rates to meet budgets.