According to the Miami Association of Realtors, Palm Beach County median prices increased year-over-year in June 2020 as home sales continued trending upward despite the global COVID-19 situation.
New pending home sales in June are up double digits year-over-year. Pending sales are a future indicator of closings one to two months out. New pending sales for Palm Beach single-family homes increased 31% year-over-year, from 1,746 to 2,287. New pending sales for condos increased 14.2% in June, from 1,301 to 1,486.
"The Palm Beach County real estate market continues its remarkable recovery as evidenced by surging pending sales and increasing market activity," JTHS-MIAMI President David Abernathy said. "Palm Beach County continues in a seller's market for both single-family homes and condos."
Pending sales started to surge in mid-April and are stronger than they were before the COVID-19 stay home orders. Home sales, however, are taking longer to close. Time to contract for Palm Beach single family homes increased 12% year-over-year in June, from 50 days to 56 days. Social distancing and shelter-in-place orders in some cases are delaying the homebuying process closing--including home inspections, appraisals and walk throughs.
Mortgage applications, another indicator of future sales, are on the rise in South Florida and nationally, as the Miami mega region continues to see additional homebuying interest from the Northeast. The Mortgage Bankers Association (MBA) reported that mortgage applications rose by 5.1% week over week for the week ending July 10.
The COVID-19 situation has accelerated the trend of homebuyers from New York and other tax-burdened Northeastern states searching and purchasing homes in South Florida.
Before the COVID-19 situation, Palm Beach 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.
Palm Beach County Median Prices Rise
Strong demand coupled with limited supply continue to drive price appreciation in Palm Beach.
Palm Beach County single-family home prices increased 5.3% year-over-year in June 2020, increasing from $356,990 to $376,000. Existing condo prices increased 7.9% year-over-year, from $190,000 to $205,000.
Palm Beach County Total Home Sales Decrease
Palm Beach County total home sales decreased 15.5% year-over-year in June 2020, from 2,858 to 2,415. Palm Beach County single-family home sales decreased 12.6% year-over-year in June 2020, from 1,692 to 1,478. Palm Beach County existing condo transactions declined 19.6% year-over-year in June 2020, from 1,166 to 937.
Dollar Volume Decreases
Single-family home dollar volume increased 16% year-over-year, from $858.2 million to $995.8 million. Condo dollar volume decreased 13.4% year-over-year, from $329.7 million to $285.5 million.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.16% in June, down from 3.23% in May. The average commitment rate across all of 2019 was 3.94%.
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 has championed, are expected to generate increased homeownership opportunities.
Palm Beach County Distressed Sales Stay Low, Reflecting Healthy Market
Only 3.1% of all closed residential sales in Palm Beach County were distressed last month, including REO (bank-owned properties) and short sales, compared to 2.1% in June 2020.
Total Palm Beach County distressed sales increased 22.9%, from 61 to 75.
Short sales and REOs accounted for 0.5% and 2.6% year-over-year, respectively, of total Palm Beach sales in June 2020. Short sale transactions increased 18.2% year-over-year while REOs increased 24%.
Nationally, distressed sales represented 3% of sales in June, about even with May but up from 2% in June 2019.
Palm Beach County Real Estate Selling Close to List Price
The median percent of original list price received for single-family homes was 95% in June, up 0.3% from 94.7% last year. The median percent of original list price received for existing condominiums was 94.1%, up 0.4% from 93.7% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 56 days, a 12% increase from 50 days last year. The median number of days between the listing date and closing date for condos was 67 days, a 21.8% increase from 55 days.
The median time to sale for single-family homes was 102 days, a 5.2% increase from 97 days last year. The median number of days to sale for condos was 107 days, a 12.6% increase from 95 days.
Palm Beach County Cash Buyers Still More than Double National Figure
Palm Beach County cash transactions comprised 37.6% of June 2020 total closed sales, compared to 40.3% last year. The national figure for cash buyers is 16%.
Palm Beach County'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 50.5% of condo closings were made in cash in June 2020 compared to 29.5% of single-family home sales.
Seller's Market for Single-Family Homes, Condos
Inventory of single-family homes decreased 26.1% in June from 6,753 active listings last year to 4,989 last month. Condominium inventory increased 2.5% to 5,831 from 5,691 listings during the same period in 2019.
Months supply of inventory for single-family homes decreased 22.9% to 3.7 months, which indicates a seller's market. Inventory for existing condominiums increased 2.5% to 5.8 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 June decreased 13.1% year-over-year, from 12,444 to 10,820. Active listings remain about 60% below 2008 levels when sales bottomed.
New listings of Palm Beach County single-family homes increased 0.9% to 1,846 from 1,829. New listings of condominiums increased 21.7%, from 1,372 to 1,670.
Nationally, total housing inventory at the end of June totaled 1.57 million units, up 1.3% from May, but still down 18.2% from one year ago (1.92 million). Unsold inventory sits at a 4.0-month supply at the current sales pace, down from both 4.8 months in May and from the 4.3-month figure recorded in June 2019.