Daytona Beach Homes Market Report

April 27, 2009

Welcome to the weekly market report for real estate in Daytona Beach, Florida. In this report, we focus on what's happened over the past week. The purpose of this page is to give a quick update of the Daytona Beach, Port Orange and Ormond Beach real estate markets.

Lynn's Activity Level

I'm am busy. I showed over 50 homes and condos last week to buyers. We wrote four contracts. There's a lot out there. Buyers are looking at more properties to get a better sense of wha's available. I also gained seven new listings that are being processed now and will be posted shortly. I have customers coming in from out of town, but we are also seeing a lot of interest from Orlando.

My activity is through the roof, but I'm not complaining. There a lot of inquiries from the web site. I'm getting new calls and email inquiries every day. I've also been working with a few buyers on higher end properties, which have not been selling very well. I've seen some tremendous values and with mortgage rates so low and prices so low, there are great properties available. There's even South Daytona Condos available for under $30,000. 1,034 sq. ft. for under $28,900. That's $27.95 per square foot. Nothing can be built for near that price. Incredible.

Distressed properties are most of the market in our area now. Nationwide, the number is 45%, but here it's much higher. Estimates have been published of 66% in the Volusia / Flagler area. Buyers are looking for bargains. The Daytona Beach REO properties and short sale markets are selling. The traditional home sale, where the owner is not in financial distress is not selling unless it's priced to compete with the distressed properties. Sellers in that position are unwilling to drop the prices to the level of the short sale and REO prices. The homes that are not in distress are what is often referred to as market value. We believe true, current market value, is what is being set by the short sales and REO sales. Until these homes clear the market, prices for Daytona Beach, Ormond Beach, Port Orange real estate and the rest of the area will stay low.

If you are reading this, I'm assuming you have an interest in our market. I encourage you to keep a close watch on prices and interest rates. Prices may be stabilizing. Not long ago, Mark Zandi, the head economist for Moody's, predicted that prices will stop falling by the end of year. So, it's even more important to pay close attention to what's going on in the Daytona Beach real estate market. You can find that information here every week. Click Ctrl-D to bookmark this page to come back to next week. The combination of low prices and historically low interest rates, makes for a tremendous buying opportunity that we won't see again for a long time. Call me at 386-566-7503 to discuss currently available homes and condos.

Weekly Homes Sold Report

This Week Homes Sold Report

Period	Homes Sold
Week Before (4/11- 4/17)	63
Last Week (4/18 - 4/24)	61
Last Month (3/18 - 3/24)	62
Last Year (4/18 - 4/24)	54

Month To Date Homes Sold Report

Period	Homes Sold
This Month (Through April 24)	227
Last Month (Through March 24)	200
Last Year (Through April 24)	188

Year to Date Daytona Beach Homes

Period	Homes Sold
This Year (January 1 - April 24, 2009)	977
Last Year (January 1 - April 24, 2008)	796

(Note: There is a delay of a few day in entry of homes sales by some agents so current reported numbers are generally a little lower than actual, but we believe reporting the most current numbers gives a good trend indicator.)

Homes Sold Analysis

We continue to be ahead of March numbers for the same period. We are 13.5% ahead of the March pace. That would suggest 328 homes and condos will be sold in April. I think that's probably optimistic, but we will probably beat March sales of 289 properties sold through the Daytona Beach MLS.

We are 181 properties, or 22.7%, ahead of last year's sale pace. That's positive news heading into the tradional "selling" season.

What happens next depends on how people view prices and economic conditions. If you are considering financing your purchase, I urge you to check out Mortgage Rates are a Game Changer for Daytona Beach Real Estate. Interest rates are so low, that when they rise, you could pay more on a monthly basis on a $180,000 mortgage than you would on a $200,000 mortgage. Check it out. As you'll read below, we are concerned with the impact of the coming inflationary period. Apparently, Mr. Warrend Buffett agrees. No long ago he said that Americans need to prepare for 1970's style inflation. What this means is keep a close eye on mortgage rates. We expect that when they start to rise, we won't see it stop for a long time.

If mortgage money does become more available, it may signal a bottom to the market. To buy close to the bottom, you will need to be working with someone who is actually in the market every day and knows what's happening. That's where I come in. I have the patience to work with you through this market. Is that important? I believe it is because there are no clear signals being reported that you will be able to act on. You will need to get a clear idea of the market and the only way to do that is to be engaged. Call me now (386-566-7503) to discuss a plan of attack that meets your needs.

There are tremendous bargains out there. Maybe you shouldn't buy right now, but, you should be looking to get a real idea of what's available. Whether you're an investor, looking for a second home, or looking to move to the Daytona Beach area, you have an opportunity to get the best prices we will see for a long time.

You can also see a graph of sales and average home prices for the past 23 months at Daytona Beach Real Estate Market Analysis.

Current Mortgage Rates

	Today	Last Week
30 YR Fixed	4.86%	4.89%
15 YR Fixed	4.61%	4.61%
5/1 ARM	4.72%	4.78%

Mortgage rates dropped slightly during the past week, and are still very low, at least in the short term.

The question is, how long will they last? From the chart below, you can see that mortgage rates have been on a downward trend for the past two months. They are close to 5% now, but the overall trend is still down. From 6.41% 19 weeks ago, we are now at 4.94% today. Rates are probably going to swing until the economic situation is resolved. That can be seen clearly in the 3 Month Interest Rate Chart below. Rates are swinging based on financial markets. However, availability is more important than rates at this time.

Donald Trump stated in an interview with CNBC that banks are making mortgages only on their own foreclosures. He said that they are not loaning to the "average guy." I think that's a bit of an exagerration, but close enough. Banks are not agressively loaning money, but there is money available for people with good credit and a good down payment. Call me if you need a good source for mortgage money.

We believe that the government has done very little to resolve the basic underlying problem of continuing foreclosures. We are doubtful that the Homeowner Affordability and Stability Plan released by the President will have any real stimulus to the housing market, but we certainly hope so. If these steps don't stem foreclosures, then prices are not going to rebound for a few years. The recently passed stimulus bill seems unlikely to do much for housing.

However, first time homebuyers, and that means anyone who has not owned their primary residence over the past three years, should check out our First Time Home Buyer Tax Credit video to see if your eligible for up to $8,000 in tax credits from the federal government. With prices and interests rates, this additional $8,000 could make it wise to purchase now or help grown children get into their first home or condo. This credit expires on December 1st, 2009.

Looking at the chart, we can also see that a new level has been reached at the bottom and we are probably near mortgage rate lows. We firmly believe rates will go up as the economy improves. Watch this very carefully if you are planning to finance your home purchase.

We have been concerned with long-term inflation for a long time. Now, Mr. Buffett agrees and many other will soon follow. Much against what many pundits are saying, we remain very concerned about long term inflation, especially with the cost of the bailout. The Congressional Budget Office released an estimate of $9 Trillion in deficits during the Obama Administration. These costs will need to paid for in the long run and that means higher taxes and inflation. President Obama is already hinting at tax increases. The Millken Institute has estimated that as much as $7.5 trillion will be spent or committed in the form of loans and payouts before the mess is over. This is more than double the total budget for the US Government. Now, how are we going to pay for that? The Chairman of the Federal Reserve is an academic who has been quoted as saying that the US has a money printing press to keep us out of trouble. We will pay for this mess through high taxes, inflation or both. Inflation is more politically acceptable than higher taxes, so that's our bet. We have advised to watch the mortgage rates carefully if you plan to finance. What's the impact of increased mortgage rates? It's over $130.00 per month on a $200,000 mortgage for a 1% increase. That translates into higher payments, or less home for the same payment. Of course, with rates falling, you would have saved over $117 a month with the 0.9% drop. Please watch these numbers. We publish them here weekly.

Home Inventory Numbers

Period	Residential Inventory
This Week	5416
Last Week	5430
Beginning of 2009	5,656

We have now been under the beginning of the year inventory numbers for over a month, not by much, but this is a pretty big deal. Inventory numbers are continue to drop slowly. The big test will be in the next two months as we hit the traditional high sales season for real estate in Daytona Beach. Still, it's good that inventory levels are holding firm. With the drop in inventory and the rise in sales, inventory in months dropped from 29.6 months to 26.4 months at the end of January and to 19 months at the end of March. A good drop, but still a big time buyer's market.

Inventory in months is lower for the under $200,000 market segment and extremely high for high priced homes over $300,000. We will continue to monitor the rates as they are a key factor in determining months of inventory on the market. An idea to consider - the inventory is bloated by sellers who have not priced to the current market. If we remove those properties, we have many fewer homes that are priced for the market. We don't know what that number is, but my best guess is over half of homes are currently over-priced.

The inventory level in months declining is one of our keys. Watch this number carefully. More decline signals more market strength. A 20% drop since the beginning of the last year is a positive sign, but we need rates at about 3600 properties or lower before we can call a stable market. Note that inventory in months is quite different for different price points.

Recent Real Estate News of Note

What is the Next Tipping Point for Real Estate
One of our most popular blog entries on how we got to where we are in this market.

If you have other information you would like to see as part of the Daytona Beach Real Estate Market weekly report, please send me a message and let me know. The following information is presented to give you a quick idea of the current state of the Daytona Beach Home and Condo market including homes sold, home inventory mortgage rates and real estate news of note. The market report includes Daytona Beach, Ormond Beach Real Estate, Holly Hill Real Estate, South Daytona Real Estate, Ponce Inlet, Wilbur by the Sea, and Ormond by the Sea. We will soon be creating a monthly reports for Palm Coast Real Estate including Flagler Beach.