My Blog

On Friday, October 24, 2008 the most up to date national information for existing home sales was released.  It was a surprise to most economists and the media that the number of existing home sales was the highest it had been for 13 months (up 5.5% from August) and it was the first increase on an annual basis in 3 years.  Furthermore, it was the largest rise in existing home sales in more than 5 years.

National inventory levels of existing homes have decreased, however we still have a 9.9 month supply of existing homes on the market and the nationwide median price is down to $191,600.

On Monday, October 27, 2008 the most up to date information for new home sales was released.  Once again most economists were caught by surprise that new home sales were up 2.7% vs. a year ago when they were down by 33%!  Economists had estimated that new home sales would be down by 2.2%, so the gain of 2.7% is certainly a positive sign. 

National inventory levels of new homes are decreasing, however we still have a 10.4 month supply of new homes on the market and the nationwide median price is down 9% to $218,400.  The inventory levels for new homes dropped by 7.3% in September, which is a record and over the past year the inventory levels for new homes has dropped by 25.4% which is the largest decrease since the U.S. government began tracking inventory levels in 1963.

So what does this mean for our local market here in the Northeast Florida area?  The national statistics give us a good overall picture of what is going on across the country, however every market is different so the key is to look at each market individually. 

I have seen local inventory levels of both new homes and existing homes drop dramatically over the last 28 months.  Some neighborhoods have seen inventory levels drop by as much as 70% since the middle of 2006.  Some of the homes were simply removed from the market because the owners decided to wait until the market turns around, while many other homes have sold after significant price reductions made them very attractive to buyers.

Are we beginning to see stabilization of our local market along with a bottoming in prices?  Time will tell, however I believe some areas are certainly at the bottom and others will see further declines.  The areas that will likely see further declines tend to be areas where there has been or is currently significant new construction occurring and/ or areas where a lot of speculative buying took place and investors were unable to make the "quick flip" scenario work, and now foreclosures are causing a decline in value.  

I believe the areas on the verge of stabilization and the beginning of the recovery cycle are areas where raw land is generally in short supply and new construction levels are low.  Attractive prices and lower inventories also must become a factor before stabilization and recovery can occur.  Examples of areas that I believe are beginning to show signs of a bottom are South Ponte Vedra Beach and Vilano Beach.  Mandarin, in Jacksonville, is also showing significant signs of bottoming.  Examples of areas that I believe will still likely see further declines in price before stabilization occurs are areas such as World Golf Village and other newer neighborhoods in Northwest St. Johns County.  Also, new condominiums in many areas of Northeast Florida will certainly see further price declines because there were too many of them built and many developers were unable to sell out prior to the end of the boom cycle.  Keep in mind that I have only used a few examples here...there are many more examples of areas that are stabilizing as well as examples of areas that will still see some price declines before stabilization occurs.

But there is no doubt that qualified buyers who have been interested in purchasing a home for quite some time are now out in full force searching for deals.  Many of them are finding just what they are looking for, and I believe this will continue to decrease inventory levels over the next 6-12 months, which will in turn bring us much closer to an overall market stabilization in Northeast Florida.

Please call or e-mail me if you are interested in finding out more about specific areas.  I am watching all local market areas very closely and can likely give you a good idea as to what is occuring in your neighborhood or area of interest!

Copyright © 2008 Todd Gifford