Florida Keys Real Estate Market Comparison:
1st Half 2012 vs. 2011
KEYS-WIDE Overview (detailed Lela's NewsLetter)
Sales during the first half of 2012 increased +5%from the 1,131 recorded during that same period in 2011. Of note is that the number of sales for the first half of 2012 exceeded those of the January-June period going back to 2006 when it was 830.
The $412K Average Sale Price (ASP) at the end of June was -2%less than the $420K for that period last year. The ASP for the January-June period, however, is up +2%from the ASP at the end of 2011. Commencing in 2007, the ASP has declined year-to-year with the largest drop of -23% for 2009 vs. 2010. Today’s $412K is a reduction of -48%over the past 6 years, placing it in the 2002 and 2003 price range. This reduction in average sales price is, we believe, more the result of 75% of buyers purchasing properties priced below $500K than it is a measure of a reduction in the average market value of property. For the first half of 2006, the peak ASP year at $805K, 33% of the buyers purchased properties priced below $500K.
The Dollar Value of Sales rose +2% to $489MM compared to $478MM for the first half of 2011 as a result of the +5%increase in total sales. This compensated for the -2%reduction in ASP.
Average Days to Sell dropped -11%to 258 days from the 290 of the 2011 January - June period.
The Sale Price-to-Original List Price (OLP/SP) increased +6%to 81.83% from 77.10% a year earlier. The OLP/SP compares the sale price of the property to its list price at the time it first came on the market versus the list price at the time the contract was written. It provides a measure of the mismatch between initial list price of many sellers and the market price acceptable to buyers. This ratio will continue to increase as the market continues to improve. The best this ratio has been was 89.73% in 1999.
The Sale Price-to-Final List Price (FLP/SP) of 91.32% did not change from 2011’s. The FLP/SP compares the sale price of the property to the list price of the property at the time the contract was written instead of at the time the property was first listed. It reflects the average percentage of the final listed price that buyers are paying for properties that have sold. This ratio will also continue to improve as the market does. The best this ratio has been was 94.85% in 2004.
The margin between the OLP/SP (81.83%) and FLP/SP (91.32%) is almost 10%, which indicates, on average, a seller can anticipate up to a 10% reduction from their Original List Price to the Final List Price prior to receiving a buyer’s offer. It had reached +25%at the end of 2009. From 2004 to 2006, that margin averaged 9.3%. Additionally, sellers and buyers today can expect the contract price, on average, to be -10%from the Final List Price. From 2004-2006, that average was -8.1%.
Pending Transactions provide a forecast for closed sales over the next two months. Pendings are properties under contract and in the process of completing the contract contingencies such as inspections and financing prior to closing. Keys-wide Pending Transactions increased +13% compared to the 2011’s first half, going from 1,187 to 1,346 during 2012. That is the highest level since 1,464 during the first half of 2004. The low was 724 for the first half of 2008.
The 3,030 Properties For Sale on June 30, 2012 was a drop of -9% from 3,345 one year earlier, and is a -40%reduction from the peak of 5,084 in March of 2007. This is the single most important measure of the continued improving market and we expect it will drop below 3,000 during Q3 of 2012.
The 15 Months of Inventory (MOI) from 18 at the end of June last year represents a -14%decline, continuing down from 55 months at the end of March 2008. 2012’s reduction in MOI is the result of the continuing decline in inventory of properties for sale with an increase in number of sales. MOI provides a measure of the rate of sales versus the supply of properties, otherwise known sometimes as the “absorption rate.”
The Average Listed Price (ALP) of $733K during the first half is up +3% from last year. The ALP peak was $990K at the end of 2007, having decreased -26%since then.
Market Area Details
Number of Sales: With the exception of Key West, off -1%with 350 sales versus 354 last year, all other Keys Markets experienced increased sales. The Middle Keys led being up +24%to 246 from 199 in 2011. The Lower Keys & Upper Keys were up +3%to 214 and +2%with 376, respectively, compared to 208 and 370 in the first half of 2011.
Average Sale Price: The Middle Keys rose +8%to $403K compared to $372K in 2011. Key West increased +1%going from $497K to $504K. The Lower Keys ASP decreased -14%to $310K versus $359K last year and the Upper Keys ASP declined -5%to $392K from $414K in 2011.
Dollar Value of Sales: The Middle Keys increased +34%to $99MM versus the $74MM in 2011 as a result of the large increase in number of sales and a higher ASP. Key West remained the same with $176MM. The Lower Keys was down -11%to $66MM from $74MM in 2011 due to the -14%decline in ASP. The Upper Keys was off -4%to $147MM from $153MM in 2011 caused by the -5% drop in ASP.
Pending Sales: Middle Keys Pending Sales increased significantly, +40%to 295 vs. 211 during the first half of 2011. Lower Keys
Pendings improved +12%to 244 from 217 last year. 438 Pending Sales in the Upper Keys was +11%higher than 395 in 2011. Key West Pending Sales were up just +1%to 369 from 364.
Average Days to Sell: Key West declined -24%to 254 versus 333. The Middle Keys also was down -17%to 305 compared to 253 during the first half of 2011. Both the Upper and Lower Keys markets rose slightly by +1% to 285 days and 241 days, respectively. We continue to believe that all sale periods are artificially low as they do not accurately account for the property being previously listed with one or more brokers prior to being sold. Additionally Short Sales have impacted the Days to Sell as some have taken two years to finally sell.
Number of Properties For Sale: All market areas had a reduction in properties listed for sale. The Middle Keys had the largest decline,
-13%to 597 from 687 last year and 830 in 2010. Key West was next, -10%with 818 compared to 909 for the first half of 2011 and 1,021 in 2010. The Upper Keys with 1,028 listings vs. 1,117 a year ago was down -8%, after totaling 1,338 at the end of June 2010. Lower Keys properties for sale fell by -7%to587 from 632 in 2011. There were 580 properties for sale in the Lower Keys at the end of the first half of 2010.
Months of Inventory (MOI): MOI declined in all areas with the Middle Keys off -30% to 15 MOI from 21 last year, and the Lower Keys -10%to 16 vs. 18 last year. The Upper Keys registered -9% to 16 compared to the 18 it had one year ago. Key West was the lowest at -9% to 14 MOI compared to 15 for the same period in 2011.
Average List Price (ALP): Key West with $812K increased +7% from $757K last year and $872K in 2010. The Middle Keys rose +6%to $732K from $691K in both 2011 and 2010. The Lower Keys was up +3% to $558K from $541K in 2011. $593K was its ALP in 2010. Upper Keys List Price did not change at $769K. It was $831K in 2010.
What do these Numbers Forecast?
The three most important market indicators are listings, sales and pendings. Listings continue to decline, while Sales and Pendings have been steadily increasing, indicating the Keys real estate market continues on its positive upward path. As the inventory continues to decrease and sales increase, buyers will have less choice and sellers will regain control of pricing leading to increasing prices. We are regularly experiencing multiple offers on well-priced properties because buyers have begun to feel urgency as they recognize the market forces described above.