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Palm Beach County homebuyers have more choices but continue to see higher sale prices

Article first appeared: https://eu.palmbeachpost.com/story/news/local/2023/12/22/home-prices-in-palm-beach-county-climb-amid-dip-in-mortgage-interest-rates/71957229007/

 

Palm Beach County buyers looking for an existing single-family home had more to choose from last month than at any time in at least two years, with active listings and months’ supply doubling and tripling compared to what was available during the same period in 2021.

A report released Wednesday, Dec. 20, by the Broward, Palm Beaches and St. Lucie Realtors group found there were nearly 4,600 active listings on the market last month, which is more than double the amount in November 2021 and 6% higher than last year.

The months’ supply of inventory was also up last month to 3.9 months, which is more than three times higher what it was two years ago and 18% higher than in 2022.

Yet, despite the cornucopia of houses for sale, the number of closed deals dropped to its lowest total since January with just 914 sales completed in an environment where prices continued to rise.

The median single-family home sales price in November hit $600,000. That’s a 6% increase in cost from November of last year, but down from the record high of $625,000 set in June.

Some Realtors see the slower sales as a reflection of temporary postponement of pent-up demand purchasing as buyers wait for mortgage interest rates and home prices to drop in a Florida housing market beset with ballooning insurance costs.

“We’ve now had about two years of where the market has slowed, and there is a buildup of tension and energy that is going to explode,” said Jeff Lichtenstein, president of Palm Beach Gardens-based Echo Fine Properties. “What I keep hearing is when we get to around a 5% interest rate, home prices will jump 10 to 20%.”

It’s a conundrum for some buyers, Lichtenstein said. He’s working with a buyer who has been waiting for sale prices to come down from pandemic-era peaks only to now be faced with higher prices and higher interest rates. The median sale price in November 2021 was $510,000. That’s $90,000 less than last month’s price.

“My prediction for the upcoming year is the pause in the market will end, and there will be a scramble to buy homes,” Lichtenstein said.

A 30-year fixed mortgage had an interest rate of 6.95% in mid-December, according to Freddie Mac. That’s down from 7.79% in late October, but still more than double the 3.05% at the same time in December 2021.

Federal Reserve officials this month left interest rates unchanged and said they did not expect to raise rates again as the run-up over the past two years has helped to slow inflation.

A New York Times story from Dec. 13 said that borrowing costs could be cut three times next year and lowered to 4.6% by the end of 2024, according to federal policy makers.

“I have people waiting to make offers right now because they’re not sure what’s going to happen next,” said Realtor Don Moore, who works with his daughter Keisha Moore at Compass real estate. “It’s not a buyer’s market right now, and some people think it will decline next year, so they are not as eager.”

Despite the increase in supply to 3.9 months, it’s still a seller’s market. A balanced market where neither the buyer or seller has the advantage is considered a 5.5 to six months’ supply.

But Moore also sees a widening gap between high-end sales and those to average buyers. People who can afford to pay cash — 46% of single-family home buyers paid cash in November — don’t have to worry about interest rates or insurance, which is needed to get a mortgage.

“It’s nice to have the luxury of having a free and clear house,” Moore said.

Florida homeowners pay an average insurance premium of $6,000, which is more than three times the nationwide average insurance premium of $1,700, according to the Insurance Information Institute. Also, the institute says Florida’s average premium has increased by a cumulative 102% over the past three years. It projects an average statewide increase of 40% or more in 2023.

Still, Florida’s population continues to grow.

The number of Sunshine State residents increased by 1.6% over the past year, according to estimates released this week by the Census Bureau. That was the second-highest percentage increase in the nation, with South Carolina ranking at the top with 1.7% growth.

In sheer numbers, Florida gained an estimated additional 365,205 residents this year, which came in second behind the 473,453 people who moved to Texas.

The top three states that lost residents in 2023 were New York (-101,984), California (-75,423), and Illinois (-32,826).

The people moving to Florida are also bringing wealth.

Between 2019 and 2022, the number of Palm Beach County households earning $200,000 or more increased by 3%, according to the Census Bureau’s American Community Survey.

At the same time, the survey found the median household income jumped by $10,000 to $76,590.

While the number of industry jobs in finance, insurance and real estate grew by 12,200 positions (1.5%), jobs in the retail and food services industry fell by 6,770 (-1.2%) during the same 2019-to-2022-time frame. Construction jobs also increased by 4,750 positions.

Bennie Waller, a housing economist and the William Cary Hulsey Faculty Fellow at the University of Alabama, said in an October interview that service industry and other lower-paid workers will have to live in less expensive areas and commute to jobs in South Florida until rental and housing inventory increases.

“It’s going to be a place only for the wealthy, and that’s going to be a huge concern, because the workers that are needed to support the wealthy will have nowhere to live,” said Waller about South Florida.

The median sale price for a condominium or townhome in Palm Beach County last month was $308,500. That’s 6% higher than the previous year. The total number of closed deals on a condo or townhome was 781, up 7.6% from the previous November.

Statewide, the number of single-family homes sold in November increased by 4% over the previous year, with median prices increasing 3% to $413,000. The median price for a condominium or townhome statewide rose 7.5% in November to a median of $330,000, and the number of sales was almost equal to November 2022.

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