| By Michael Gerrity | May 23, 2022 8:42 AM ET
According to the Miami Association of Realtors, Palm Beach County total home sales decreased 26.2% year-over-year, from 4,006 to 2,956. Palm Beach existing condo sales decreased 27% year-over-year, from 2,017 to 1,472. Single-family home sales decreased 25.4% year-over-year, from 1,989 to 1,484.
Sales declined because it's in comparison to a record-setting 2021 market that benefited from 2.5% mortgage rates, higher supply and pandemic-driven demand.
Palm Beach existing condo luxury ($1-million-and-up) sales decreased 15.9% year-over-year in April 2022 to 138 transactions. Palm Beach single-family luxury transactions stayed even by decreasing a negligible 0.6% year-over-year to 337 sales in April 2022.
Palm Beach luxury condos have an inventory of 2.6 months of supply. There are 3.4 months of supply in luxury single-family homes. Luxury months of supply continues to trend downward for all property types because of the robust demand.
Homebuyers leaving tax-burdened states to purchase in Florida (no state income tax), new-to-market firms moving here, low interest rates, the appeal of property as an inflation hedge, rising wages and accrued savings in lockdowns, strong equity market performance, a reassessment of housing needs and lifestyles because of the pandemic and expansion of remote work are all factors driving South Florida real estate demand.
With global vaccinations rising and unstable political situations around the world, South Florida is seeing an increase in foreign homebuyers. Global buyers are coming here for the vaccine and purchasing property.
Vaccinated foreigners were allowed to resume travel to the U.S. back in November 2021 and that is leading to more international investment in South Florida - the No. 1 destination in the U.S. for foreign buyers. 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, along with all our amenities.
Palm Beach existing condo sales priced between $400K to $600K decreased 4.7% year-over-year to 201 transactions in April 2022. Palm Beach single-family homes priced between $400K to $600K decreased 26.5% year-over-year to 396 transactions in April 2022.
Rising Mortgage Rates Should Eventually Slow Price Growth Nationally, in Palm Beach
Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Demand for Palm Beach real estate is at all-time highs. Inventory for Palm Beach single-family homes (1.4 months) and condos (1.1 months) are low.
Locally, the greater share of Palm Beach luxury sales is also part of the reason for the large year-over-year increase in median prices.
To battle national inflation, the Federal Reserve has raised rates two times this year and has plans for more hikes. High inflation and the Fed's tightening policy are the main drivers behind rising mortgage rates.
Mortgage rates have risen more than 2 percentage points since the beginning of the year. The monthly mortgage payment has increased by about $520 since the first week of January, when rates averaged 3.2%, according to NAR.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.98% in April, up from 4.17% in March. The average commitment rate across all of 2021 was 2.96%.
The mortgage rate is projected to land at 5.3% by 4Q 2022, according to NAR. That is still low compared to an all-time average of about 8% in the U.S.
Long term, the hope is higher rates will lead to more days on the market (gives buyers more choices). Higher rates will eventually lead to a moderation of the growth rate of pricing. With the growth rate of pricing cooling, total inventory could grow later. Historically, inventory expands six months after rates rise, but today's market is unlike any other.
Palm Beach County single-family home median prices increased 29% year-over-year in April 2022, increasing from $466,000 to $601,000. Existing condo median prices increased 22.2% year-over-year, from $240,250 to $293,500.
More Inventory Needed for Low-Supply/High-Demand Market
Inventory tends to rise in the spring and summer and then it fades in the fall and winter.
Historically in the U.S., total inventory tends to expand six months after mortgage rates begin to rise. A new study by Realtor.com detailed that 64% of possible sellers intend to list their home by October 2022.
New listings of Palm Beach single-family homes decreased 8.7% to 2,052 from 2,248. New listings of condominiums decreased 1.3%, from 1,752 to 1,729.
Inventory of single-family homes decreased 2.5% year-over-year in April 2022 from 2,211 active listings last year to 2,155 last month. Condominium inventory dropped 40.5% year-over-year to 1,650 from 2,774 listings during the same period in 2021.
Months' supply of inventory is down since July 2019 for single-family, reflecting strong demand. Months' supply of inventory for single-family homes stayed even at 1.4 months, which indicates a seller's market. Inventory for existing condominiums decreased 50% to 1.1 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 April 2022 decreased 23.7% year-over-year, from 4,985 to 3,805.
Nationally, total housing inventory at the end of April amounted to 1,030,000 units, up 10.8% from March and down 10.4% from one year ago (1.15 million). Unsold inventory sits at a 2.2-month supply at the current sales pace, up from 1.9 months in March and down from 2.3 months in April 2021.
Palm Beach Real Estate Had a $266 Million Local Economic Impact Just in April 2022
Every time a home is sold it impacts the economy: income generated from real estate industries (commissions, fees and moving expenses), expenditures related to home purchase (furniture and remodeling expenses), multiplier of housing related expenditures (income earned as a result of a home sale is recirculated into the economy) and new construction (additional home sales induce added home production).
The total economic impact of a typical Florida home sale is $90,300, according to NAR. Palm Beach County sold 2,956 homes in April 2022 and had a local economic impact of $355 million.
Palm Beach total dollar volume totaled $2.4 billion in April 2022. Single-family home dollar volume decreased 21.76% year-over-year, from $2 billion to $1.6 billion. Condo dollar volume decreased 8.57% year-over-year, from $857 million to $783 million.
Palm Beach Distressed Sales Keep Dropping, Reflecting Healthy Market
Only 0.6% of all closed residential sales in Palm Beach were distressed last month, including REO (bank-owned properties) and short sales, lower than the 0.7% in April 2021.
Total Palm Beach distressed sales decreased 37% year-over-year in April 2022, from 27 to 17. Short sales and REOs accounted for 0.06% and 0.5% year-over-year, respectively, of total Palm Beach sales in April 2022. Short sale transactions decreased 60% year-over-year while REOs decreased 31.8%.
Palm Beach's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented less than 1% of sales in April 2022, down from 2% in April 2021.
National and State Statistics
In Florida, closed sales of single-family homes statewide totaled 28,171, down 15.3% year-over-year, while existing condo-townhouse sales totaled 13,711, down 20.9% over April 2021. Closed sales may occur from 30- to 90-plus days after sales contracts are written.
Nationally, total existing-home sales transactions completed transactions that include single-family homes, townhomes, condominiums and co-ops, slid 2.4% from March to a seasonally adjusted annual rate of 5.61 million in April. Year-over-year, sales dropped 5.9% (5.96 million in April 2021).
The statewide median sales price for single-family existing homes was $410,000, up 21.8% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month's statewide median price for condo-townhouse units was $310,000, up 24% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.
Nationally, the median existing-home price for all housing types in April was $391,200, up 14.8% from April 2021 ($340,700), as prices increased in each region. This marks 122 consecutive months of year-over-year increases, the longest-running streak on record.
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 April 2022, up 1.5% from 98.5% last year. The median percent of original list price received for existing condominiums was 100%, up 4.1% from 96.1% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 9 days, a 30.8% decrease from 13 days last year. The median time to sale for single-family homes was 52 days, a 13.3% decrease from 60 days last year.
The median number of days between the listing date and contract date for condos was 10 days, down 64.3% from 28 days. The median number of days to sell for condos was 51 days, a 29.2% decrease from 72 days.
Palm Beach Cash Sales More than Double National Figure in April 2022
Cash sales represented 58.1% of Palm Beach closed sales in April 2022, compared to 50.9% in April 2021. About 26% 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 66% of all Palm Beach existing condo sales and 50.3% of single-family transactions.