According to the Miami Association of Realtors, Palm Beach County total home sales surged in October 2020 as strong pent-up demand and record-low mortgage rates fueled transactions.
Palm Beach County total home sales jumped 34% year-over-year, from 2,412 to 3,233. Palm Beach single-family home sales jumped 32.8% year-over-year, from 1,369 to 1,818. Palm Beach existing condo transactions increased 35.7% year-over-year, from 1,043 to 1,415.
Palm Beach County single-family home sales and existing condos have now each posted increases for four consecutive months. Palm Beach County single-family home sales are up 0.3% year-over-year through the first 10 months of 2020. Palm Beach existing condos are down 4.2% year-over-year through the first 10 months of 2020.
"Homebuyers leaving tax-burdened Northeastern states to purchase Palm Beach real estate, record-low interest rates and pent-up demand fueled last month's transactions," JTHS-MIAMI President David Abernathy said.
Palm Beach County Single-Family Luxury Home Sales Surge 141.6% in October 2020
Palm Beach single-family homes priced between $400K to $600K surged 58.3% year-over-year to 516 transactions in October 2020. Palm Beach existing condo sales priced between $400K to $600K increased 88.1% to 126 transactions.
Palm Beach single-family luxury ($1-million-and-up) transactions jumped 141.6% year-over-year to 215 sales in October 2020. Palm Beach existing condo luxury ($1-million-and-up) sales increased 134.8% year-over-year to 54 transactions.
Record-low interest rates; a record-high S&P 500; the appeal of stable assets in a volatile economy; homebuyers leaving tax-burdened Northeastern states to purchase in Florida (no state income tax); and work-from-home and remote-learning policies have all combined to create a robust market for luxury single-family properties.
Robust Price Appreciation in Palm Beach County
Strong demand coupled with limited supply continue to drive price appreciation in Palm Beach.
Palm Beach County single-family home prices increased 17% year-over-year in October 2020, increasing from $359,000 to $420,000. Existing condo prices increased 22.7% year-over-year, from $172,000 to $211,000
Single-Family Home Dollar Volume Increases
Single-family home dollar volume increased 79.8% year-over-year, from $709.3 million to $1.3 billion. Condo dollar volume increased 55.2% year-over-year, from $284 million to $440.7 million.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 2.83% in October, down from 2.89% in September. The average commitment rate across all of 2019 was 3.94%.
Lack of access to mortgage loans continues to inhibit further growth of the existing condominium market. Of the 9,307 condominium buildings in Miami-Dade and Broward counties, only 13 are approved for Federal Housing Administration loans, down from 29 last year, according to the Florida Department of Business and Professional Regulation and FHA.
A new condo approval process is expected to increase sales. The new guidance, which went into effect in October 2019, extends certifications from two years to three, allows for single-unit mortgage approvals, provides more flexibility with owner/occupancy ratios, and increases the allowable number of FHA loans in a single project. The changes, many of which MIAMI and NAR have championed, are expected to generate increased homeownership opportunities.
Palm Beach County Distressed Sales Stay Low, Reflecting Healthy Market
Only 1.8% of all closed residential sales in Palm Beach were distressed last month, including REO (bank-owned properties) and short sales, compared to 3.9% in October 2020.
Total Palm Beach distressed sales decreased 38.9%, from 95 to 58.
Short sales and REOs accounted for 0.4% and 1.4% year-over-year, respectively, of total Palm Beach sales in October 2020. Short sale transactions decreased 17.6% year-over-year while REOs decreased 43.6%.
Nationally, distressed sales represented less than 1% of sales in October, equal to September's percentage but down from 2% in October 2019.
Palm Beach Real Estate Selling Close to List Price
The median percent of original list price received for single-family homes was 96.5% in October, up 1.5% from 95.1% last year. The median percent of original list price received for existing condominiums was 94.8%, up 1.1% from 93.8% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 21 days, a 61.1% decrease from 54 days last year. The median number of days between the listing date and closing date for condos was 36 days, down 36.8% from 57 days.
The median time to sale for single-family homes was 68 days, a 28.4% decrease from 95 days last year. The median number of days to sale for condos was 80 days, an 19.2% decrease from 99 days.
Palm Beach's Cash Buyers Top National Figure
Palm Beach cash transactions comprised 40.3% of October 2020 total closed sales, compared to 42.8% last year. The national figure for cash buyers is 19%.
Palm Beach's high percentage of cash sales reflects South Florida's ability to attract a diverse number of international homebuyers, who tend to purchase properties in all cash.
Condominiums comprise a large portion of Palm Beach's cash purchases as 50.7% of condo closings were made in cash in October 2020 compared to 32.3% of single-family home sales.
Seller's Market for Palm Beach Real Estate
Inventory of single-family homes decreased 35.6% in October from 6,419 active listings last year to 4,131 last month. Condominium inventory decreased 6.2% to 5,388 from 5,744 listings during the same period in 2019.
Months supply of inventory for single-family homes decreased 37.8% to 2.8 months, which indicates a seller's market. Inventory for existing condominiums decreased 3.8% to 5 months, which also indicates a seller's market. A balanced market between buyers and sellers offers between six- and nine-months supply.
Total active listings at the end of October decreased 21.7% year-over-year, from 12,163 to 9,519. Active listings remain about 60% below 2008 levels when sales bottomed.
New listings of Palm Beach single-family homes decreased 2.6% to 2,049 from 2,103. New listings of condominiums decreased 0.7%, from 1,823 to 1,810.
Nationally, total housing inventory at the end of October totaled 1.42 million units, down 2.7% from September and down 19.8% from one year ago (1.77 million). Unsold inventory sits at an all-time low 2.5-month supply at the current sales pace, down from 2.7 months in September and down from the 3.9-month figure recorded in October 2019.