As we launch FlaglerHomeAuctions.com, we thought it important to share an economics viewpoint on where the market is and how Real Estate Auctions can help. Thie fundamental analysis in the market economics is, in part, why we decided to bring a broader cooperative solution to the marketplace in the form of FlaglerHomeAuctions.com
During the past 24 months, we've had record levels of falling prices, loss of equity, loan defaults, decreasing Sales to List percentages, increasing Days on Market, failed businesses, and bankruptcies. Foreclosures, Short Sales, and Distressed Sales are at an all time high. Approximately 38% of all homes for sale in Palm Coast are Short Sales or Lender/Corporate Owned, of which many of the short sales will be future foreclosures if they are not sold fast enough. Coupled with one of the highest unemployment rates in Florida due to such a high percentage of local jobs being in Real Estate related industries, the Flagler County real estate market needs a serious boost forward NOW!
As we previously stated, our local economy is highly dependent on the real estate market, which right now is in turmoil. Even though mortgage rates are low, many buyers are still waiting on the sidelines and lenders are not anxious to lend. We recently attended the National Association of Realtors conference in Orlando back in November, and one thing we gave serious consideration to was that the Chief economist said:
"Low prices are not a concern, it is falling prices which is the concern."
"Low prices means affordability and people respond, but with falling prices, some buyers are hesitant.and housing's recovery will depend on stabilizing prices and inventory absorptions"
- NAR Chief Economist Lawrence Yun (2008 NAR Convention - Orlando, FL)
The longer it takes for Real Estate to find buyer support levels, the worse it will be for everyone. Many Buyers will not buy homes and Lenders will not lend as long as real estate prices continue to fall at 1%+ per month. What needs to happen from an economics perspective, at least locally, is a flushout of the highly motivated inventory. Currently there is far more highly-motivated "must-sell" inventory than our market will absorb at the current price levels, and that is why prices are still falling. We need to seek that level of support quickly, and find where buyers are confident to purchase... then and only then will this market stabilize.
Scenario A figuratively represents what has been occurring over the past 2 years, and a continual longer decline
Scenario B figuratively represents the results of flushing out motivated inventory to achieve stabilization faster
To do this quickly, there is only one answer to solve standoff markets: Auctions. Why Auctions? Some of the most valuable items you know are sold at auction: expensive cars, real estate, high-end artwork, but most importantly our financial markets. Commodities .. the very food we eat and the energy we use every day are sold at open outcry auctions. Why? Simple. They provide liquidity. They will bring the highest buyers and the most motivated sellers together.
But for Real Estate auctions to work, they must be properly priced and very well marketed. Unfortunately, there are a few companies coming in from other areas (nationally) that are holding auctions for REO/Foreclosures and advertising them as "Fire Sales". These are NOT the kind of auctions we need, nor the kind we are proposing. We've attended these auctions, and they are unfortunately selling at about 30-60% of current market values. We can't begin to tell you what that can do to our market. We will agree that flushing out this inventory is vitally important, and doing so even at Fire Sale prices is BETTER than letting them sit on inventory vacant for extended periods.
Initially when we conceptualized the idea of running online auctions, we were going to use them to get an edge over the rest of the real estate companies in the area. Strategic? Yes. At the right time? Absolutely. Would we succeed in the middle of a recession? Probably so. But while lining our pockets, it wouldn't have done as much to help our local real estate market, the city we live in, or any of our fellow realtors' careers and families either, many of which are personal friends of ours.
So, we've made a profound decision to create an OPEN ONLINE AUCTION PLATFORM for all realtors in Flagler County .. where ALL realtors can hold auctions on their listings and are fully protected for their cooperating commission sides. Why would we do this? Because in the long run, not only does it make very good business sense for everyone, this will re-establish liquidity in the marketplace, and the resulting support will be made very publicly known. Buyers, Sellers, Agents and even Lenders will see where the support levels are as it is happening. There is nothing more powerful that can provide a demonstration of buyer support than watching bids for properties as they happen.
"A new Cooperative Solution is needed which combines the power of Online Auctions (think Ebay) with the cooperation and local expertise of the professional Real Estate community."
REGISTER AT WWW.FLAGLERHOMEAUCTIONS.COM TODAY!