According to the Miami Association of Realtors, Palm Beach County total home sales increased in February 2021 as pent-up demand and record-low mortgage rates continue fueling transactions.
Palm Beach County total home sales increased 3.1% year-over-year in February 2021, from 2,248 to 2,318. Palm Beach single-family home sales decreased 1.8% year-over-year, from 1,233 to 1,211. Palm Beach existing condo transactions increased 9.1% year-over-year, from 1,015 to 1,107.
"Record-low interest rates, homebuyers leaving tax-burdened Northeastern states and work-from-home and remote-learning policies have all combined to boost Palm Beach real estate," JTHS-MIAMI President Bill Mate said.
The demand for South Florida real estate is evident in median time to contact. Palm Beach County single-family homes are going under contact in 30 days, 50.8% faster than a year ago (61 days). Palm Beach condos are going under contract 40 days, 32.2% faster than a year ago (59 days).
Lack of inventory in certain price points is impacting sales, particularly for single-family homes. Increased housing starts and more sellers listing properties in 2021 should help alleviate the lack of supply.
Palm Beach County Luxury Single-Family Home Sales Surge 62.3% in February 2021
Palm Beach County single-family luxury ($1-million-and-up) transactions jumped 62.3% year-over-year to 172 sales in February 2021. Palm Beach existing condo luxury ($1-million-and-up) sales increased 93.8% year-over-year to 93 transactions.
Luxury months of supply continues to trend downward for all property types, month-over-month, and year-over-year.
Palm Beach single-family homes priced between $400K to $600K increased 9.4% year-over-year to 314 transactions in February 2021. Palm Beach existing condo sales priced between $400K to $600K increased 56.5% to 108 transactions.
Record-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.
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 24% year-over-year in February 2021, increasing from $363,000 to $450,000. Existing condo prices increased 24.9% year-over-year, from $189,000 to $236,000.
Single-Family Home and Condo Dollar Volume Increases
Single-family home dollar volume increased 36.4% year-over-year, from $750.7 million to $1 billion. Condo dollar volume increased 43% year-over-year, from $337.5 million to $482.6 million.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 2.81 in February, up from 2.74% in January. The average commitment rate across all of 2020 was 3.11%.
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 Florida Department of Business and Professional Regulation and FHA.
A better condo approval process is expected to increase sales. The 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 Distressed Sales Stay Low, Reflecting Healthy Market
Only 1.4% of all closed residential sales in Palm Beach were distressed last month, including REO (bank-owned properties) and short sales, compared to 2.8% in February 2020.
Total Palm Beach distressed sales decreased 50%, from 64 to 32.
Short sales and REOs accounted for 0.3% and 1.1% year-over-year, respectively, of total Palm Beach sales in February 2021. Short sale transactions decreased 40% year-over-year while REOs decreased 51.9%.
Nationally, distressed sales represented less than 1% of sales in February 2021, down from 2% in February 2020.
Palm Beach Real Estate Selling Close to List Price
The median percent of original list price received for single-family homes was 96.6% in February 2021, up 1.7% from 95% last year. The median percent of original list price received for existing condominiums was 95.3%, up 1.7% from 93.7% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 30 days, a 50.8% decrease from 61 days last year. The median number of days between the listing date and closing date for condos was 40 days, down 32.2% from 59 days.
The median time to sale for single-family homes was 73 days, a 29.1% decrease from 103 days last year. The median number of days to sale for condos was 82 days, a 15.5% decrease from 97 days.
Palm Beach's Cash Buyers Top National Figure
Palm Beach cash transactions comprised 49.2% of February 2021 total closed sales, compared to 47.7% last year. The national figure for cash buyers is 22%.
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 58.3% of condo closings were made in cash in February 2021 compared to 40.9% of single-family home sales.
Seller's Market for Single-Family Homes, Condos
Inventory of single-family homes decreased 52.5% in February 2021 from 6,282 active listings last year to 2,987 last month. Condominium inventory decreased 25.4% from 6,170 listings to 4,600 during the same period in 2020.
Months supply of inventory for single-family homes decreased 52.4% to 2 months, which indicates a seller's market. Inventory for existing condominiums decreased 24.1% to 4.1 months, which indicates a buyer's market. A balanced market between buyers and sellers offers between six- and nine-months supply.
Months supply of inventory is down since July 2019 for single-family, reflecting strong demand.
Total active listings at the end of February 2021 decreased 39.1% year-over-year, from 12,452 to 7,587. Active listings remain about 60% below 2008 levels when sales bottomed.
New listings of Palm Beach single-family homes decreased 13.5% to 1,763 from 2,039. New listings of condominiums decreased 2.7%, from 1,838 to 1,788.
Nationally, total housing inventory at the end of February amounted to 1.03 million units, equal to January's inventory and down 29.5% from one year ago (1.46 million). Unsold inventory sits at a 2.0-month supply at the current sales pace, slightly up from January's 1.9-month supply and down from the 3.1-month amount recorded in February 2020. NAR first began tracking the single-family home supply in 1982.