|50-50 Chance... Right?|
|80% Comes From Only 20%... Really?|
Then I came to Palm Coast, FL and Flagler County in 2000. I brought the "Fastest Growing County in the USA" thing with me, as Fairfax and Loudon, Virginia had owned it for a while. Prices started rising and places like Hammock Dunes, Ocean Hammock, and Hammock Beach soared into the $$Millions. Palm Coast's salt water canals and gated communities like Grand Haven took off too. A modest Maronda home for $70,000 in 2000, became $225,000 by the end of 2005. It amazed me that there were no homes under $200,000 for sale in our MLS system! Had our rate of appreciation continued through to the present time, our median price would have gone over $1,000,000. I know it's bad right now, but thank God the inevitable happened when it did. Had we gone even higher, the fall would have been even worse!
So what constitutes the "upper end?" It's quite arbitrary, really. When I bought my first home new from a builder in Tampa, FL for $25,000 in 1971, the upper end was rumored to be $100K. When I left the Pentagon and my 20 year Army career for real estate in Virginia in 1986, the upper end was $300K. by the time I left there in 2000, it was $1,000,000. In Southern California and the Silicon Valley, $1,000,000 got you a quaint starter home!
For my purposes, I call upon the "80-20 Rule" (that's the Pareto Principle for you math junkies). Loosely interpreted (from my MBA days at Georgia Tech) it implies that "80% of effects come from 20% of the causes." This theory came from observations that 80% of the wealth was enjoyed by 20% of the people. So I've always theorized that upper end property is the top 20% (loosely) in a given market. Interestingly, this applies to an amazing array of circumstances. For example, I've managed 5 different real estate offices in my career and, invariably, 80% of the sales are done by 20% of the agents. On most sports teams, 80% of the "impact" or "points" or "tackles," comes from the top 20% on the team.
In Palm Coast and Flagler Beach, FL... and all of Flagler County, FL, we'll say the upper end in the 4th quarter of 2010, starts at $500,000. Of the 1,340 detached homes (not condos or land) for sale today, 187 are priced at or above $500K.
The numbers tell a real story about our market:
- Over the past six months, about 15% of the listings for sale are over $500K, but only 2% of the actual closed sales.
- In the "normal" range, 3% of homes listed for sale are bank foreclosures and 32% are attempted short sales.
- In the "upper end," only 1% are bank listings and only 6% are short sale attempts.
- Of the 699 homes sold in the past six months, only 14 are upper end (2% of the total market)... It's such a small %, that it's impossible to make inferences... except that it's not a great time to be for sale at the upper end!
- Also, two startling facts, not tied to price:
- Over 70% of homes listed never sell (because they are priced too high!)
- Of those that do sell, nearly 60% are distressed sales.
- It's an amazing buyer's market.
- Homes are selling, but shoppers are seeking bargains.
- The upper end is clogging the funnel, as sellers in this range are more reluctant to face the irrefutable reality of The Law of Supply and Demand... (even though better educated, on average, and probably sat through Economics classes in college)
- Since 70% of listings don't sell... to be successful...
- It's a Price War
- and a Beauty Contest
- When choosing a Real Estate Agent, do your homework.
- a CLHMS is certified to help you in the upper brackets.
- a CDPE is equipped to help you with foreclosures and short sales.
Parkside Realty Group, LLC