First of all, a big thank you to customers and future customers - in 2020, we were the top team for Realty Executives Oceanside for northeast Florida. And, 2021 is looking to be just as busy and productive a year in real estate.
In the fourth quarter of 2019, 660 single family homes closed, while in the fourth quarter of 2020, 939 homes closed - a 42% increase in closings. Commensurately, the average sales price on a single family home was up 17%. The condo/townhouse market picture looks similar: quarter four of 2019 showed 137 closings versus 215 closings in quarter four of 2020 - a 56.9% increase. The average sales price increased by 32.6% (numbers courtesy of Florida Realtors). Coupled with these numbers, inventory is incredibly low - right now, there are just seven homes for sale on the saltwater canals.
When we discuss this market picture with customers and friends, two questions pop up:
Is this a bubble market as in 2005-2007?
Does this market have staying power?
We all know that it’s all about COVID. Covid has defined 2020 and has caused unprecedented changes - experts say many of which are here to stay. In this month, which marks the one year anniversary of our shutdown, there are countless articles and analyses in the news/newspapers/social media on how people coped with the shutdown - working remotely, remodeling projects, at home workouts, and contrary to what everyone expected, booming home sales. As it appears that more and more people can work remotely, they are looking for places with nice weather and outdoor activities. Flagler County boasts over 125 miles of bike and walking trails along the ICW and through beautiful wooded areas - with benches for sitting and unwinding placed throughout. There are 16 miles of beaches to walk along or sit on and where, even on July 4th, it’s possible to find a parking place!
In addition, Flagler County has been in the bottom half of total COVID cases in the state of Florida.
Taxes - While the Florida tax burden may not be the lowest in the United States, it’s pretty close to the lowest. That, plus the combination of taxes, weather and lifestyle might well put Florida at the very top of places to live. And, the cost of living in Flagler is lower than the state average, but residents of Flagler are still in close proximity to 9 million people. Jacksonville, Orlando, Daytona Beach - cities where you can do anything you want to do - opera, Disney, space flight - are within an hours drive. And, you can still but come home to peaceful living.
Over the last few years, we have heard a lot about the Baby Boom generation reaching retirement age, but that has not fully happened - yet. 1957 was the year in which the most Baby Boomers were born - 4.3 million babies! In 2017, those people turned 60 - approaching retirement age. In 2023, they reach full retirement age and are planning ahead where to live.
2020 has also been characterized by an increase in civil disobedience and rioting, particularly in urban areas. People are seeking safer havens outside of cities.
So, when we get into a conversation about whether this is a market like the 2005-2007 bubble, we contend that bubble and the bust that followed in 2008 were more factors of poor banking/lending practices. While no one can predict the future, there are stark differences between 2007-2008 and the market today. Does the market have staying power? Given the deep societal changes caused by our COVID year, we think so.