Residential Real Estate News
Palm Beach Area Luxury Home Sales Spike 62 Percent in February
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.
