The Miami Association of Realtors is reporting Palm Beach County's real estate market registered double-digit, year-over-year total home sales gains in February 2022. Palm Beach is coming off a historic year in 2021 that saw the county set new all-time annual marks for total home sales, condo sales and single-family sales.
"In this new-normal of remote work and how your job is no longer necessarily connected to where you live, Palm Beach County and all of South Florida has emerged as a top home destination," JTHS-MIAMI President Brad Westover said. "Palm Beach real estate demand is being driven by a reassessment of housing needs and lifestyles, low interest rates, low taxes, new-to-market firms moving here, the appeal of property as an inflation hedge and more."
Palm Beach County total home sales increased 10.4% year-over-year in February 2022, from 2,318 sales to 2,558. Palm Beach single-family home transactions increased 2.1%, from 1,211 to 1,237. Palm Beach existing condo sales increased 19.3%, from 1,107 to 1,321.
Palm Beach Luxury Condo Sales Surge 23.7%; Mid-Market $400-600K Transactions Jump Also
Palm Beach existing condo luxury ($1-million-and-up) sales surged 23.7% year-over-year to 115 transactions. Palm Beach single-family luxury transactions increased 22.1% year-over-year to 210 sales in February 2022.
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 single-family homes priced between $400K to $600K increased 22.6% year-over-year to 385 transactions in February 2022. Palm Beach existing condo sales priced between $400K to $600K increased 41.7% year-over-year to 153 transactions in February 2022.
More Inventory Arriving by Spring for Low-Supply/High-Demand Market
There is always a seasonal fade in inventory in the winter. More inventory is expected to come this spring as potential home sellers become more comfortable listing and showing their homes. Rising interest rates should also continue to drive demand in the first quarter of 2022.
New listings of Palm Beach single-family homes decreased 5.2% to 1,671 from 1,763. New listings of condominiums decreased 11.2%, from 1,788 to 1,588.
Inventory of single-family homes decreased 40.5% year-over-year in February 2022 from 2,987 active listings last year to 1,777 last month. Condominium inventory dropped 67.5% year-over-year to 1,494 from 4,600 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 decreased 45% to 1.1 months, which indicates a seller's market. Inventory for existing condominiums decreased 75.6% to 1.0 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 February 2022 decreased 56.9% year-over-year, from 7,587 to 3,271.
Nationally, total housing inventory at the end of February totaled 870,000 units, up 2.4% from January and down 15.5% from one year ago (1.03 million). Unsold inventory sits at a 1.7-month supply at the current sales pace, up from the record-low supply in January of 1.6 months and down from 2.0 months in February 2021.
Fed Raised Rates on Wednesday and Announced Plans for More Rate Hikes: Decisions Should Eventually Slow Price Growth Nationally, in Miami
Rising median prices is a trend nationwide. Low inventory relative to high demand leads to prices rising. Locally, the greater share of Palm Beach luxury sales over the past year is part of the reason for the large year-over-year increase in median prices.
On Wednesday, the Federal Reserve raised rates for the first time in three years and announced plans for six more rate hikes by year's end to curb national inflation.
The decision will accelerate demand for housing in the short term and eventually put downward pressure on median prices. The belief is that with mortgage rates rising in the coming months, the high demand for housing will be moderated and the growth of median prices will slow. As more sellers list properties in 2022, the increased inventory should also ease the growth of median prices.
Palm Beach County single-family median prices increased 18.9% year-over-year in February 2022, increasing from $450,000 to $535,000. Existing condo median prices increased 16.5% year-over-year, from $236,000 to $275,000.
Mortgage rates remain low historically and are making home purchases more affordable. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.76% in February, up from 3.45% in January. The average commitment rate across all of 2021 was 2.96%.
NAR Chief Economist Lawrence Yun expects the 30-year fixed mortgage rate to increase to 3.7% by the end of 2022. It would be still lower than the pre-pandemic rate of 4%.
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.
Miami 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 $1.9 Billion, Showcasing Impact Housing Plays in Local Economy
Throughout the pandemic, housing has proved how it can lift the economy nationally and locally. For every two homes sold in the U.S., one job is created. The total economic impact or multiplier effect of a typical Florida home sale is $90,300, according to NAR.
Palm Beach total dollar volume totaled $1.9 billion in February 2022. Single-family home dollar volume increased 22.81% year-over-year, from $1 billion to $1.3 billion. Condo dollar volume increased 36.48% year-over-year, from $482 million to $658 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 1.4% in February 2021.
Total Palm Beach distressed sales increased 34.4% year-over-year in February 2022, from 32 to 21. Short sales and REOs accounted for 0.3% and 0.5% year-over-year, respectively, of total Palm Beach sales in February 2022. Short sale transactions increased 33.3% year-over-year while REOs decreased 50%.
Palm Beach's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented less than 1% of sales in February 2022, equal to the percentage in February 2021.
Palm Beach's Percentage of Sales Continue to Outpace the Nation, State
Last month, closed sales of single-family homes statewide totaled 23,661, down 1.2% year-over-year, while existing condo-townhouse sales totaled 10,975, down 3.6% over February 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, sank 7.2% from January to a seasonally adjusted annual rate of 6.02 million in February. Year-over-year, sales decreased 2.4% (6.17 million in February 2021).
The statewide median sales price for single-family existing homes was $381,481, up 21.1% 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 $290,000, up 24.3% 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 February was $357,300, up 15.0% from February 2021 ($310,600), as prices grew in each region. This marks 120 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 February 2022, up 3.5% from 96.6% last year. The median percent of original list price received for existing condominiums was 99.5%, up 4.4% from 95.3% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 13 days, a 56.7% decrease from 30 days last year. The median time to sale for single-family homes was 55 days, a 24.7% decrease from 73 days last year.
The median number of days between the listing date and contract date for condos was 13 days, down 67.5% from 40 days. The median number of days to sale for condos was 53 days, a 35.4% decrease from 82 days.
Palm Beach Cash Sales More than Double the National Figure in February 2022
Cash sales represented 55.4% of Palm Beach closed sales in February 2022, compared to 49.2% in February 2021. About 25% 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 64.6% of all Palm Beach existing condo sales and 45.7% of single-family transactions.