Demand for Palm Beach Area Condos Surge in 2021

Demand for Palm Beach Area Condos Surge in 2021

Residential News » Palm Beach Edition | By Michael Gerrity | October 11, 2021 8:02 AM ET

57 percent of all condo sales were in cash in August

The Miami Association of Realtors is reporting that Palm Beach County total home sales continued rising in August 2021 as pent-up demand, more U.S. individuals and companies moving to South Florida, and record-low mortgage rates continue fueling transactions.

Palm Beach County total home sales rose 1.9% year-over-year in August 2021, from 3,014 sales to 3,072. Palm Beach single-family home transactions decreased 10.5%, from 1,814 to 1,624. Palm Beach existing condo sales increased 20.7%, from 1,200 to 1,448.

"Palm Beach County continues to attract homebuyers and companies," JTHS-MIAMI President Bill Mate said. "U.S. individuals and companies, particularly from tax-burdened Northeast and Western states, will continue moving to South Florida because the region is pro-business, low tax, home to sunny weather and a healthy lifestyle, and more."

Palm Beach County home sales are also significantly higher vs. August 2019. Palm Beach total home sales are up 13.5% in August 2021 vs. August 2019, from 2,707 to 3,072. Palm Beach single-family home sales (3.7% increase) and condo transactions (26.9% jump) are higher than August 2019.

Demand for Palm Beach Condos Surges; Condo Sales Rise 20.7% Year-over-Year in August 2021

Nearly every week brings another announcement of a major U.S. company either moving their headquarters to South Florida or opening offices here. Last week, Seattle-based Microsoft announced its plans to open a regional hub and Latin American offices in Miami. International companies are also showing interest in opening offices in South Florida.

With so many U.S. companies and individuals relocating to our region over the last year, many of those relocating homebuyers are purchasing condos. International homebuyers, who have long preferred condos, have pent-up demand for South Florida real estate and are also returning to the No. 1 market for foreign homebuyers.

Palm Beach County existing condo sales are up in all price ranges in August 2021, with major transaction increases in properties selling at $300K and above.

Lack of inventory in certain price points is impacting sales, particularly for single-family homes. More inventory is expected to come to the market as potential home sellers become more comfortable listing and showing their homes. The falling number of homeowners in mortgage forbearance will also bring about more inventory.

Palm Beach Luxury Sales Jump as Northeast and West Coast Buyers Move to Mega Region

Palm Beach single-family luxury ($1-million-and-up) transactions jumped 20.4% year-over-year to 224 sales in August 2021. Palm Beach existing condo luxury ($1-million-and-up) sales increased 65% year-over-year to 66 transactions.

There are 3.3 months of supply in luxury single-family homes; 3.1 months of supply in luxury condos. Luxury months of supply continues to trend downward for all property types, month-over-month, and year-over-year.

Low interest rates; a robust 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.

With global vaccinations rising and unstable political situations around the world, South Florida is seeing an increase in foreign homebuyers. Global buyers are also coming here for the vaccine and purchasing property. Global buyers purchase in Miami because Miami is a world-class global city with better real estate prices than other similar global cities. Foreign buyers feel at home with our incredible diversity and acceptance of all cultures.

Palm Beach Mid-Market Sales Keep Rising Year-over-Year

Palm Beach single-family homes priced between $400K to $600K increased 10.7% year-over-year to 516 transactions in August 2021. Palm Beach existing condo sales priced between $400K to $600K increased 66.3% to 158 transactions.

New listings of Palm Beach single-family homes decreased 9.8% to 1,706 from 1,892. New listings of condominiums decreased 7.4%, from 1,635 to 1,514.

Inventory of single-family homes decreased 44% year-over-year in August 2021 from 4,227 active listings last year to 2,369 last month. Condominium inventory decreased 59.5% year-over-year to 2,157 from 5,321 listings during the same period in 2020.

Months' supply of inventory is down since July 2019 for single-family, reflecting strong demand. Months' supply of inventory for single-family homes decreased 53.3% to 1.4 months, which indicates a seller's market. Inventory for existing condominiums decreased 71.2% to 1.5 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 2021 decreased 52.6% year-over-year, from 9,548 to 4,526.

Nationally, total housing inventory at the end of August totaled 1.29 million units, down 1.5% from July's supply and down 13.4% from one year ago (1.49 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from July but down from 3.0 months in August 2020.

Palm Beach Homeowners' Home Equity Continues Surging as Many Pay Lower Mortgage Payments

With interest rates still at record lows, many South Florida homeowners have refinanced their home loans. So not only are many homeowners paying lower mortgage payments today; they are doing so while their wealth (home equity) has significantly increased. Home equity can be tapped for renovations, college loans and more.

Palm Beach County single-family median prices increased 20.3% year-over-year in August 2021, increasing from $399,000 to $480,000. Existing condo median prices increased 7.9% year-over-year, from $215,000 to $232,000.

The greater share of Palm Beach luxury sales in 2021 compared to a year ago is part of the reason for the large year-over-year increase in median prices.

Rising median prices is a trend nationwide as record-low mortgages rates and the increased availability of remote work and education has accelerated the demand for housing. Low inventory relative to high demand leads to prices rising.

Lower mortgage rates are making home purchases more affordable. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 2.84% in August, down from 2.87% in July. The average commitment rate across all of 2020 was 3.11%. NAR Chief Economist Lawrence Yun expects the 30-year fixed-rate mortgage to remain below 3.5% in 2021.

Should mortgage rates resume their upward climb, home price growth is likely to slow in response. As more sellers list properties in 2021, the increased inventory should ease the growth of median prices.

South Florida remains a bargain compared to other global cities. In Miami, $1 million can net homebuyers 85 square meters of prime property, according to Knight Frank's 2021 The Wealth Report. Monaco (15 square meters), Hong Kong (23), London (31), New York (34) and Geneva (35) and others offer significantly less prime land for $1 million.

Palm Beach Dollar Volume Totals $1.8 Billion, Showcasing Impact Housing Plays in Local Economy

While other industries struggled over the past year, housing lifted the economy nationally and locally. For every two homes sold in the U.S., one job is created. Miami dollar volume showcases the impact housing plays in the local economy.

Palm Beach total dollar volume totaled $2.5 billion in August 2021. Single-family home dollar volume increased 11.3% year-over-year, from $1.2 billion to $1.3 billion. Condo dollar volume increased 41.4% year-over-year, from $366.4 million to $518 million.

Palm Beach Distressed Sales Keep Dropping, Reflecting Healthy Market

Only 0.8% of all closed residential sales in Palm Beach were distressed last month, including REO (bank-owned properties) and short sales, compared to 1.7% in August 2020.

Total Palm Beach distressed sales decreased 52% year-over-year in August 2021, from 50 to 24. Short sales and REOs accounted for 0.3% and 0.5% year-over-year, respectively, of total Palm Beach sales in August 2021. Short sale transactions increased 50% year-over-year while REOs decreased 65.9%.

Nationally, distressed sales represented less than 1% of sales in August 2021, equal to August 2020.

Palm Beach Real Estate Attracting Multiple Bids, Buyers Going Over-List Price

The median percent of original list price received for single-family homes was 100% in August 2021, up 4.1% from 96.1% last year. The median percent of original list price received for existing condominiums was 97.7%, up 3.1% from 94.8% last year.

The median number of days between listing and contract dates for Palm Beach single-family home sales was 11 days, a 68.6% decrease from 35 days last year. The median time to sale for single-family homes was 57 days, a 27.8% decrease from 79 days last year.

The median number of days between the listing date and contract date for condos was 16 days, down 63.6% from 44 days. The median number of days to sale for condos was 60 days, a 31% decrease from 87 days.

Palm Beach Cash Sales are More than Double National Figure in August 2021

Cash sales represented 48.3% of Palm Beach closed sales in August 2021, compared to 37.3% in August 2020. About 22% of U.S. home sales are made in cash, according to the latest NAR statistics.

The high percentage of cash buyers reflects South Florida's top position as the preeminent American real estate market for foreign buyers, who tend to purchase with all cash as well as some moving from more expensive U.S. markets who can buy more with their profits from real estate sales.

Cash sales accounted for 56.8% of all Palm Beach existing condo sales and 40.7% of single-family transactions.

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