Driven by waves of Northeast and West Coast buyers
According to the Miami Association of Realtors, Palm Beach County real estate broke its record for the most total homes sales in only 11 months as November 2021 sales totals pushed the market over the old standard.
Palm Beach County total home sales decreased 0.6% year-over-year in November 2021, from 2,810 sales to 2,793 because of lack of inventory and Covid19 comps (stats are in comparison to major rebound demand last year). Palm Beach single-family home transactions decreased 2.7%, from 1,533 to 1,491. Palm Beach existing condo sales increased 2%, from 1,277 to 1,302.
Year-to-date, Palm Beach County has registered 34,385 existing total home sales in 11 months, which surpasses the previous annual record of 32,083 transactions in the entire year of 2015.
"Palm Beach continues to attract homebuyers from high-density, high-tax markets such as New York and California," JTHS-MIAMI President Bill Mate said. "If you can work from anywhere with the expansion of remote work, then why not work in a pro-business region with incredible weather and lifestyle?"
Palm Beach Luxury Market in Demand as Northeast and West Coast Buyers Move to Mega Region
Palm Beach County single-family luxury ($1-million-and-up) transactions increased 18.7% year-over-year to 235 sales in November 2021. Palm Beach existing condo luxury ($1-million-and-up) sales increased 14.1% year-over-year to 81 transactions.
There are 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 coming here for the vaccine and purchasing property.
Vaccinated foreigners were allowed to resume travel to the U.S. starting on Nov. 8 and that will lead to more international investment in South Florida - the No. 1 destination 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.
Palm Beach single-family homes priced between $400K to $600K increased 15.2% year-over-year to 485 transactions in November 2021. Palm Beach existing condo sales priced between $400K to $600K increased 49% to 152 transactions.
Low-Supply/High-Demand Market for Palm Beach Real Estate
There is always a seasonal fade in inventory in the fall and winter. More inventory is expected to come to the market by spring 2022 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. Expectation that interest rates will rise should continue to drive demand in the first quarter of 2022.
New listings of Palm Beach single-family homes decreased 14.7% to 1,471 from 1,793. New listings of condominiums decreased 4.1%, from 1,568 to 1,504.
Inventory of single-family homes decreased 48.6% year-over-year in November 2021 from 3,940 active listings last year to 2,027 last month. Condominium inventory decreased 65.8% year-over-year to 1,846 from 5,403 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 55.6% to 1.2 months, which indicates a seller's market. Inventory for existing condominiums decreased 75.5% to 1.2 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 November 2021 decreased 58.5% year-over-year, from 9,343 to 3,873.
Nationally, total housing inventory the end of November amounted to 1.11 million units, down 9.8% from October and down 13.3% from one year ago (1.28 million). Unsold inventory sits at a 2.1-month supply at the current sales pace, a decline from both the prior month and from one year ago.
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 22% year-over-year in November 2021, increasing from $418,000 to $510,000. Existing condo median prices increased 19.4% year-over-year, from $220,000 to $262,750.
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 a 30-year, conventional, fixed-rate mortgage was 3.07 in November, equal to October's rate. The average commitment rate across all of 2020 was 3.11%.
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%.
Should mortgage rates resume their upward climb, home price growth is likely to slow in response. As more sellers list properties in 2021 and 2022, 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 $1.99 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. Palm Beach dollar volume showcases the impact housing plays in the local economy.
Palm Beach total dollar volume totaled $1.99 billion in November 2021. Single-family home dollar volume increased 23.1% year-over-year, from $1.2 billion to $1.4 billion. Condo dollar volume increased 16.6% year-over-year, from $488.6 million to $569.6 million.
Palm Beach Distressed Sales Keep Dropping, Reflecting Healthy Market
Only 0.7% of all closed residential sales in Palm Beach were distressed last month, including REO (bank-owned properties) and short sales, compared to 1.6% in November 2020.
Total Palm Beach distressed sales decreased 54.5% year-over-year in November 2021, from 44 to 20. Short sales and REOs accounted for 0.3% and 0.5% year-over-year, respectively, of total Palm Beach sales in November 2021. Short sale transactions decreased 30% year-over-year while REOs decreased 61.8%.
Nationally, distressed sales represented less than 1% of sales in November 2021, equal to the percentage in November 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 99.2% in November 2021, up 2.6% from 96.7% last year. The median percent of original list price received for existing condominiums was 97.9%, up 2.8% from 95.2% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 13 days, a 45.8% decrease from 24 days last year. The median time to sale for single-family homes was 55 days, a 19.1% decrease from 68 days last year.
The median number of days between the listing date and contract date for condos was 15 days, down 64.3% from 42 days. The median number of days to sale for condos was 56 days, a 34.1% decrease from 85 days.
Palm Beach Cash Sales More than Double National Figure in November 2021
Cash sales represented 49.8% of Palm Beach closed sales in November 2021, compared to 40.8% in November 2020. About 24% 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 59.2% of all Palm Beach existing condo sales and 41.5% of single-family transactions.