Boca Raton and Palm Beach County Real Estate Market Update - April 2019
Median Days to get a Contract Increase Significantly
The message from your team here at Palm Beach Premier Real Estate this month is: Days on Market and Days to Secure A Contract Jump Higher.
So let’s take a closer look at the local internal real estate market numbers…. What we’re seeing is the following:
- The median sales price of a single family home in Palm Beach County was $350,000, similar to last month and about the same level as a year ago.
- The number of housing units sold was also largely the same.
- The inventory of homes for sale in Palm Beach County increased again year over year, although down from the highs in March.
- In the Townhouse and Condo Market, the typical Palm Beach County condo that sold in March fetched $185,000 which is a similar number to a year ago.
- Luxury homes are continuing to take significantly longer to sell.
- One of the bigger changes we are seeing: the amount of time it took to get a contract jumped over 30% versus last year for single family homes and about 10% for condos and townhouses!
So what does that mean for Sellers?
It highlights JUST HOW IMPORTANT it is to price your properties competitively, meaning very close to what has sold most recently. In this current marketplace, as we transition to that Buyer’s market, it really is a beauty contest and a price war along with having great marketing as well.
Clearly (as we mentioned last month), the housing market is facing some headwinds and some significant downward pressure in the marketplace.
Once again we need to consider these 3 important factors:
- We have definitely reached the top of Real Estate Cycle - 2008-2018. Note: each cycle is 7-10 years, so it makes sense that we are starting our downward leg.
- We’ve reached the top of Debt Cycle - 4 interest rate increases in 2018 (9 in all by the FEDERAL RESERVE) have now created headwinds with consumers highly leveraged. Note: Every 1% increase to the mortgage rate impacts buying power by 10%. As we know, less qualified people equals less buyers.
- Buyers have Price Fatigue - Property values have increased more than 40%+ since 2008, however wages have simply not kept pace with about a 10% increase. Something has to give, either people get paid more or home prices have to come down... Which do you think is more likely?
Looking Ahead For the Rest of 2019 As it Relates To Housing:
We can certainly extrapolate some themes here:
First - The average household’s cost to service debt has reached a point at which it will become more difficult and challenging to find buyers who can qualify for a conventional mortgage (FNM, FRE, FHA).
Second - Housing affordability issues will continue to be a theme going forward.
Third – Inventory will continue to Increase, prices will soften and properties will likely sit on the market for extended periods of time.
Fourth – The effects of the worldwide economic slowdown will be felt here in the USA throughout 2019 and into 2020 and will have a knock-on impact for the housing market.
Finally - It’s very surprising that the nationwide media and industry experts haven’t focused on the economic data that shows that on a national level that existing home sales have fallen for 14 months in a row.
Furthermore, the Federal Reserve has once again, just this past week with the release of its recent minutes, indicated no rate increases. In point of fact, it is more likely we will see a cut to the Fed Funds Rate. Keep in mind that interest rate pauses and cuts are a sign of economic weakness not growth.
Going forward we will definitely be keeping a continued close watch on prices, interest rates, inventory levels and the number of closed sales.
Here is a quick video going into more depth of current economic indicators:
Review the Palm Beach County Market Statistics for March in Detail Here:
The Palm Beach County market statistics are courtesy of your REALTOR®, a proud member of the Realtors® Association of the Palm Beaches (RAPB). RAPB represents over 14,000 members involved in all aspects of residential and commercial real estate.