Real estate prices in Palm Beach County up from 2021 but sales cooling
Palm Beach County’s manic real estate market continued to mellow last month with homes lingering longer for sale and prices still sliding since the start of summer.
Existing single-family homes sold for a median price of $570,000 in October, which is 14% higher than it was during the same month last year, according to a report released Friday by the Broward, Palm Beaches and St. Lucie Realtors Group.
But the October price is down from the record high median of $620,000 in June — a sign that the seller’s advantage in Palm Beach County may be waning.
Another sign; the supply of homes on the market for sale soared 146% in October from the previous year to 3.2 months, giving buyers more homes to choose from, and more time to look, and sellers more competition.
Drugs, cars and real estate: Miami developer buys infamous Florida home tied to money, glitz and overdose deaths
Underwater real estate?: A piece of submerged land in Boca Raton is selling for $43 million.
Pretty or awful in pink?: Boca Raton home for sale takes pink to the extreme with colorful accents, cabinets and tile
A balanced market, where sellers and buyers do not appear to have a clear advantage, is considered as having 5.5 months’ supply of inventory.
It was just six months ago when homebuyers were mired in bidding wars and offering thousands of dollars over the asking price to win a home. Last month, homes sat for a median of 28 days before going under contract. That’s double what it was in October 2021.
“I think the next year may be kind of sluggish,” said Jeff Lichtenstein, president of the Palm Beach Gardens-based Echo Fine Properties. “On the flip side, we are an outlier of a market because we have so much growth and a net gain of people moving here.”
Lichtenstein said higher mortgage interest rates have slowed sales but not stalled them out completely. The average single-family home sale price in October was still nearing seven figures at $928,051, which is up 15% from last year.
But homeowners who want to sell may be staying put because their current mortgage has a lower interest rate than what they could get today. Buyers looking to purchase a home may be waiting for rates to come down.
On Friday, the weekly average rate for a 30-year fixed mortgage was 6.61% according to the government-sponsored enterprise Freddie Mac. Freddie Mac purchases, guarantees, and securitizes home loans.
To help buyers, sellers could offer to pay down the interest rate, expert says
To sweeten the deal for buyers hesitant to purchase a home with the current rates, Lichtenstein said sellers could opt to pay down the interest rate for the buyer for two years. The plan, which is called a “temporary buydown,” can lower the interest rate by 2 percentage points in the first year of the mortgage and 1 percentage point in the second year. After that it would revert back to the original rate.
“Instead of during the pandemic when there were all these strategies to win a home, it’s reversed, and now we’re looking at what can we do to creatively sell a home,” Lichtenstein said.
Realtors are hoping sales will pick up as the season digs in. The number of single-family homes sold in October was down 29% from last year.
“This lull has been a little weird,” said Mae Ferguson, founding agent and senior global real estate adviser for Sotheby’s West Palm Beach office. “We went from going 100 mph to a normal summer.”
Palm Beach County condominium and townhomes sales dropped 34% in October from 2021. The median price last month on a condo and townhome was $290,000, which is 22% higher than the previous year. The average price was $396,212, which is a 12.5% increase.
Kelly Smallridge, president and CEO of the Business Development Board of Palm Beach County, said many of the Wall Street companies putting down roots in West Palm Beach are in the process of moving.
With most existing office buildings already leased, she expects to see a bigger push of business and employee relocations when buildings such as One Flagler are finished.
Money can’t buy class, or can it?: Palm Beach’s extravagant real estate prices ooze into the restrained Town of Gulf Stream
‘Big ugly boxes’: Florida real estate boom means big homes on small lots in West Palm Beach neighborhood
Luxury, art and coffee: Apartment complex brings life to West Palm Beach area
“When the newer buildings near completion, you will start to see more movement in the (housing) market,” Smallridge said. “Summers are always slow, but we are getting back into season.”
Real estate economists say housing markets in some areas of the country are cooling off, with average home prices in September falling in 39 of the 100 largest cities. The most significant drops are happening in the West, including San Jose, Calif., Austin, Texas, San Francisco, Boise, Idaho and Salt Lake City, Utah, according to a study from Florida Atlantic University and Florida International University.
In Florida, five housing markets still rank in the top 10 nationally for most overvalued, Those include Cape Coral, Palm Bay, Deltona, Lakeland and Tampa.
The Miami metro area, which includes Palm Beach, Broward and Miami-Dade counties, ranked 38th on the most overvalued market list with buyers paying about 40% above long-term pricing trends.
“Despite what they are saying nationally, most Florida municipalities are not seeing average price decreases,” said FAU real estate economist Ken H. Johnson. “We’re not going to get off scot-free, but we’re not going to wake up and see a major downturn in prices of 50% like we did 15 years ago.”
Palm Beach West: How West Palm is becoming an extension of the island
A Cinderella real estate story: Lake Park’s waterfront about to begin makeover years in the making
Pricey demolition: Aging beachfront units in Ocean Ridge sold for $29 million. Now they’re slated for demolition.
Johnson said it could be years before incomes catch up with the spike in housing costs. An analysis this month from the online brokerage firm Redfin found that homebuyers in South Florida need to earn $128,892 a year to afford a mortgage payment that meets the benchmark of spending no more than 30% of income on housing.
The Redfin report blames higher mortgage rates for the hike in salary needed to afford a mortgage. That doesn’t mean there’s going to be a housing bust, but sales may slump until interest rates settle.
“I think a year from today we will see home prices really spike again,” Lichtenstein said. “The reason is, the demand is still there.”
Martin County sees 15% increase in median price for homes
In Martin County, the median price for a single-family home last month was $565,250, about 15% higher than last year. St. Lucie County’s median sale price was $379,450, which was up 13% from 2021.
Realtors prefer to use the median price as a measuring stick because it is the midpoint where half of the properties sell for less and half for more. It isn’t as easily skewed as the average price, which can have steep fluctuations based on a bulk of lower-end sales or one mega sale.
Both Treasure Coast counties saw the number of homes for sale increase last month. Martin County had a 2.9 months’ supply of single-family homes, up 190% from last year. St. Lucie County had a 3 months’ supply, up 131%.
