1. Values are stabilizing and/or declining in uniform areas. By example, Fort Walton Beach, Niceville and Crestview;
2. Inventory continues to increase
3. There are only 45 days left in tourist season
4. List prices are too high
5. Buyers are resisting ridiculously high list prices
6. With all the new construction, competition is fierce
7. Builders have fewer vacant specs and fewer coming out of the ground
8. In trying to set the market, builders have listed properties too high
9. Qualitative Analysis – Real estate activity has slowed

If you are seller and have had your property listed on the market with little action, reduce your price now. Do not wait. Here’s why:

• Values are decreasing in uniformareas which are leading indicators
• Values are increasing at unsustainable rates in the beach resort areas
• Supply is increasing in uniformareas but supply and demand are in balance
• Supply has been and continues to increase in the beach resort markets
• Days on Market are increasing a little in uniformareas
• Days on Market are increasing significantly for properties in the beach resort markets
• Competition from new home construction continues including builder incentives

What concerns me in these uniform areas are the decreasing values. Because supply and demand are in balance and the average DOM is below 90 days or 3-6 months. Meaning two of the three indicators are solid but the one that counts the most is values. And they are declining.

If you are a buyer, wait a while to buy. Unless it is new construction. Or negotiate hard by starting with a lower offer that is below at least twice the average sales-to-list price ratio. If your relator disagrees, fire him or her.

If your realtor is not coming at you with sound supported advice about what you should do as a buyer or seller, consider making a change. A sound competent professional will initiate action on your behalf.

Detached Single Unit Values

Fort Walton Beach – Declining YOY YTD at a per annum rate between -2% and -5%;
Despite all the realtor hype, values are decreasing in some uniform areas like Fort Walton Beach. Why is this important? Because in my view, these uniform areas are leading indicators for our area. Because they have PIE – Population, Income and Employment. It’s important to differentiate between the beach market and uniform markets. If the uniform markets with substantial data samples support an oversupply, decreasing values and lengthy DOMs, this could mean trouble ahead.

Areas of Increasing Values

All of Santa Rosa Beach – North, South and East

In the beach resort market:

• Values are increasing at very high rates of increase and have been for quite some time
• There is an over supply
• Days on market are increasing

The rates of increase currently being realized in Santa Rosa Beach are unsustainable. These include 9% to 20% YOY YTD increases in value. In 2005, we called these rates of increase staggering and unprecedented. Yes, they are indeed staggering – but not unprecedented.

Scary isn’t it? Does anyone really believe that their property will indefinitely continue to increase 10% + YOY in value? Are beach resort properties south of the bay experiencing another market bubble?

Increasing Values but an Oversupply?

I randomly selected the MLS area above. The absorption rate is 5.83/mo. resulting in a 14-month supply. This is an oversupply. In this area, supply and demand are considered in balance when there are six, maybe seven, months’ supply. But yet increasing values?

Yep. And compare the average days on market for the Sales with the Active Listings. Average CDOM for sales of 141 with an average CDOM of 196 for listings. Meaning that properties are just sitting on the market. Where are all the buyers? Rates are low. Is there trouble on the horizon? We shall see.

In my opinion the bottom of the beach resort market in our area was first quarter 2012. Folks buying property this year are likely over paying. But only time will tell.

However, the good news for some of these areas with Declining Values is that supply and demand are in balance and properties are selling in less than 90 days. Or 3-4 months. Meaning of the three important measurements, the only thing I’m seeing right now are decreasing values. Despite rising inventory, supply and demand are still in balance.

I can break down markets into sub markets and sub areas. Too time consuming to do here. Contact me if you have questions about your specific property and I’ll nail what’s happening.

My advice is to lower your list price and sell your property now.

BBQ: “buy on the fringe and wait. Buy land near a growing city! Buy real estate when other people want to sell. Hold what you buy!” – John Jacob Astor

BLT: “Turn the Page” by Bob Seger and the Silver Bullet Band

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