The Miami Association of Realtors is reporting that Palm Beach County total home sales surged double digits in August 2020. Palm Beach County total home sales jumped 11.3% year-over-year, from 2,707 to 3,014. Palm Beach single-family home sales jumped 15.8% year-over-year, from 1,566 to 1,814. Palm Beach existing condo transactions increased 5.2% year-over-year, from 1,141 to 1,200.
"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.
Pent-up demand has led to an increase in mortgage applications locally and nationally. Mortgage applications to purchase a home rose 3% last week from the previous week and were a stunning 40% higher from a year ago, according to the Sept. 9 Mortgage Bankers Association's seasonally adjusted index.
The COVID-19 situation has accelerated the trend of homebuyers from New York and cold weather and tax-burdened Northeastern states searching and purchasing homes in South Florida.
Before the COVID-19 situation, the Palm Beach market was exceptionally strong. Miami real estate had record low delinquencies, no subprime mortgage crisis, strong demand/low supply, low interest rates, strong population growth, demand from foreign buyers and tax refugees from tax burdened states, high consumer confidence and a strong job market.
Strong Price Appreciation in Palm Beach
Strong demand coupled with limited supply continue to drive price appreciation in Palm Beach.
Palm Beach County single-family home prices increased 12.4% year-over-year in August 2020, increasing from $355,000 to $399,000. Existing condo prices increased 17.8% year-over-year, from $182,500 to $215,000.
Mid-Market and Luxury Home Sales Jump in August 2020
Palm Beach single-family homes priced between $400K to $600K surged 35.9% year-over-year to 466 transactions in August 2020. Palm Beach existing condo sales priced between $400K to $600K increased 35.7% to 95 transactions.
Palm Beach single-family luxury ($1-million-and-up) transactions jumped 70.6% year-over-year to 186 sales in August 2020. Palm Beach existing condo luxury ($1-million-and-up) sales increased 11.1% year-over-year to 40 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.
Single-Family Home Dollar Volume Increases
Single-family home dollar volume increased 47.1% year-over-year, from $801.7 million to $1.2 billion. Condo dollar volume has stayed even year-over-year at $366.4 million.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 2.94% in August, down from 3.02% in July. This gives consumers incredible buying power. The average commitment rate across all of 2019 was 3.94%.
Only 1.7% of all closed residential sales in Palm Beach were distressed last month, including REO (bank-owned properties) and short sales, compared to 3% in August 2020. In 2009, distressed sales comprised 70% of Miami sales.
Total Palm Beach distressed sales decreased 39%, from 82 to 50.
Short sales and REOs accounted for 0.1% and 1.5% year-over-year, respectively, of total Palm Beach sales in August 2020. Short sale transactions decreased 53.8% year-over-year while REOs decreased 36.2%.
Nationally, distressed sales represented less than 1% of sales in August, equal to July's percentage, but down from 2% in August 2019.
Palm Beach Real Estate Selling Close to List Price
The median percent of original list price received for single-family homes was 96.1% in August up 1.3% from 94.9% last year. The median percent of original list price received for existing condominiums was 94.8%, up 0.6% from 94.2% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 35 days, a 27.1% decrease from 48 days last year. The median number of days between the listing date and closing date for condos was 44 days, down 24.1% from 58 days last year.
The median time to sale for single-family homes was 79 days, a 13.2% decrease from 91 days last year. The median number of days to sale for condos was 87 days, a 10.3% decrease from 97 days.
Palm Beach's Cash Buyers Top National Figure
Palm Beach cash transactions comprised 37.3% of August 2020 total closed sales, compared to 38.9% last year. The national figure for cash buyers is 18%.
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 49.2% of condo closings were made in cash in August 2020 compared to 29.4% of single-family home sales.
Seller's Market for Palm Beach Real Estate
Inventory of single-family homes decreased 31.9% in August from 6,210 active listings last year to 4,227 last month. Condominium inventory increased 0.9% to 5,321 from 5,275 listings during the same period in 2019.
Months supply of inventory for single-family homes decreased 30.2% to 3 months, which indicates a seller's market. Inventory for existing condominiums increased 10.6% to 5.2 months, which 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 August decreased 16.9% year-over-year, from 11,485 to 9,548. Active listings remain about 60% below 2008 levels when sales bottomed.
New listings of Palm Beach single-family homes increased 20.2% to 1,635 from 1,360. New listings of condominiums increased 13.8%, from 1,663 to 1,892.
Nationally, total housing inventory at the end of August totaled 1.49 million units, down 0.7% from July and down 18.6% from one year ago (1.83 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, down from 3.1 months in July and down from the 4.0-month figure recorded in August 2019.