Friday, August 2, 2019

Numbers Make The World Go 'Round! - Eye Openning FL Keys Real Estate Stats

To paraphrase Joel Grey in "Cabaret" (love that movie), it isn't Money that makes the World Go 'Round, but rather, Numbers do.

Numbers on money, numbers on phones, numbers on horrid tattoos, numbers on flights, numbers of election results, and numbers on addresses just to name a few, but today, we're talking about the numbers that make up Statistics.

In particular, Florida Keys Property Sales Statistics, focusing on Absorption Rates.

Absorption Rates? You mean Rosie and The Quicker Picker Upper?? (See how many Millennials catch that one). No, but rather the hypothetical hypothesis determining the number of Months of inventory on the Market, at a rate compared to the previous year's sales. It is an exceptional tool to gauge the temperature of a given Market.

Its not exactly E=MC2, but rather like this: 365(Days)/ Number of Previous Year's Sales, Multiply that by the number of Properties Currently Available, then divide that number by 30 (representing the length of the average month).  This gives you a Number that, hypothetically, is how many months it would take to sell out the current inventory, if no new properties came on the market.

For example let's say a community had 20 sales and there are currently 35 on the market. 365/20 = 18.25.  Take this Number and Multiply by 35. So,18.25 x 35 = 638. Divide this number by 30 (Days in Month) 638/30 = 21.2.  Therefore an Absorption Rate of 21.2 months to sell out the inventory. If the average number of months for a community is, let's say, 10 months, then you can see that this means there are wayyyy too many properties on the Market, and Therefore, its a Buyer's Market for that community.

Using the same formula of 20 sales but only 6 on the market, that number would be 3.6 months.  Compared to the average of 10 months, this would be a shortage of properties, and thereby, a Seller's Market.

Yes, Yes I know, It's heady stuff.  And basically, Numbers Porn for a Math Geek like me.  But this is an amazing tool!  Especially when negotiating Contracts.  
In fact, I used this same model twice yesterday on offers.  One, where I was working with a Buyer to substantiate our offer on an over priced listing, and another were I was working with a Seller, to substantiate our price on a very low offer we received. When you have facts on your side it certainly gives you leverage.

Numbers make the World Go 'Round. 

So Lets Take a Look at some current Florida Keys Absorption Rates:
The Current  Par Absorption Rate for properties outside of Key West, for the last 5 years, is between 10-12 months.  Under that, equates to a Seller's Market whereas Above, would indicate a Buyers Market.

The First, is Key Largo and Islamorada Waterfront Homes, as this is my personal primary Market.
The current numbers are 18.6 and 12.4 months for Keys Largo and Islamorada respectively.  You're a bit high Key Largo!  Buyers ...  Now's your Time!!



In the next we break it down by the Three segments of the Keys outside of Key West.  Upper (Key Largo and Islamorada), Middle (Layton thru Marathon), and Lower (South of The 7 Mile Bridge to Stock Island) Keys.  Here, you can see that the Lower and Middle Keys are just below Par, while the Upper Keys, at 15 months, are High.  Again for Buyers, The Upper Keys are looking good for negotiation!



Now, Here is My favorite: Keys Waterfront Homes By Price.  And this is REALLLY eye opening! Again given 10-12 as Par, You can see we have a Glut in certain areas and scarcity in others.  Over $3M has 41 Months of Inventory!! That's almost 3.5 years!  Not as bad as it was at a rate of 5 years, last year, but still wayyy too many.  Buyers, THIS is the time to STRIKE! Now conversely, those under $1M are scarce, at 6 months, so Sellers...Hold your Ground.





Now of course, every home is different and this is just a hypothetical gauge.  BUT, a very effective one.

OK, so now that I have put you to sleep with stats and graphs, Here is a Picture of Lobters!!
Just to wake you back up.

Lobster Season starts Tuesday, and 6 is your legal daily limit ... NUMBER.

Numbers make the World Go 'Round, They Make The World Go 'Round!


Work with an Agent who KNOWS the Numbers.  Put the experience and expertise of The Conchquistador to work for you! For more information on the outstanding real estate opportunities that exist in the Keys, call me at 305.439.7730 or email me at DropAnchor@TheRealEstateConch.com.

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