The Miami Association of Realtors is reporting this week that Palm Beach County total home sales surged double digits in January 2022. Sales totals in January come after Palm Beach County set a new all-time annual record for total home sales in 2021.
"Major domestic migration from high-tax, high density states to our low-tax, pro-business region over the past two years has boosted not only the real estate market but boosted our economy," JTHS-MIAMI President Brad Westover said.
Palm Beach County total home sales rose 11.5% year-over-year in January 2022, from 2,073 sales to 2,311. Palm Beach single-family home transactions increased 2.9%, from 1,154 to 1,188. Palm Beach existing condo sales increased 22.2%, from 919 to 1,123.
Palm Beach Luxury Condo Sales Surge 31.7%; Mid-Market Sales Rise Also
Palm Beach luxury ($1-million-and-up) condo transactions rose 31.7% year-over-year to 79 sales in January 2022. Palm Beach single-family home luxury sales also rose 23.6% year-over-year to 194 transactions in January 2022.
There are 2.7 months of supply in luxury single-family homes and 2.4 months of supply in luxury condos. Luxury months of supply continue 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 in South Florida.
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 on Nov. 8 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 6.6% year-over-year to 355 transactions in January 2022. Palm Beach existing condo sales priced between $400K to $600K surged 82.3%, increasing to 144 transactions.
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 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 13.2% to 1,609 from 1,853. New listings of condominiums decreased 8%, from 1,823 to 1,677.
Inventory of single-family homes decreased 49.9% year-over-year in January 2022 from 3,446 active listings last year to 1,727 last month. Condominium inventory dropped 68.7% year-over-year to 1,581 from 5,045 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 52.2% to 1.1 months, which indicates a seller's market. Inventory for existing condominiums decreased 77.8% 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 January 2022 decreased 61% year-over-year, from 8,491 to 3,308.
Nationally, total housing inventory at the end of January amounted to 860,000 units, down 2.3% from December and down 16.5% from one year ago (1.03 million). Unsold inventory sits at a 1.6-month supply at the current sales pace, down from 1.7 months in December and from 1.9 months in January 2021.
Fed's Decision for More Rate Hikes in 2022 Should Slow Growth of Median Prices
Rising median prices is a trend nationwide. Low inventory relative to high demand leads to prices rising. Locally, the greater share of South Florida luxury sales is part of the reason for the large year-over-year increase in median prices.
The Fed's decision to raise rates and end bond buying in 2022 will accelerate demand for housing in the short term and eventually put downward pressure on median prices.
Palm Beach County single-family median prices increased 24.8% year-over-year in January 2022, increasing from $422,000 to $526,500. Existing condo median prices increased 21.1% year-over-year, from $218,900 to $265,000.
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 3.45% in January, up from 3.10% in December. The average commitment rate across all of 2021 was 2.96%.
Should mortgage rates continue rising, home price growth is likely to slow in response. As more sellers list properties in 2022, the increased inventory should ease the growth of median prices.
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.
Palm Beach Dollar Volume Totals $1.46 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. The total economic impact of a typical Florida home sale is $90,300, according to NAR.
Palm Beach total dollar volume totaled $1.46 billion in January 2022. Single-family home dollar volume increased 0.1% year-over-year, from $979.9 million to $981.3 million. Condo dollar volume increased 34% year-over-year, from $356.6 million to $477.8 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 1.6% in January 2021.
Total Palm Beach distressed sales dropped 42.4% year-over-year in January 2022, from 33 to 19. Short sales and REOs accounted for 0.2% and 0.6% year-over-year, respectively, of total Palm Beach sales in January 2022. Short sale transactions decreased 55.6% year-over-year while REOs dropped 37.5%.
Palm Beach's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented less than 1% of sales in January 2022, equal to the percentage in January 2021.
National, State Sales Rise as More Inventory Expected to Arrive Later in the Year
Statewide, single-family home sales increased 1.4% year-over-year in January 2022, from 21,587 to 21,885. Florida existing condo sales increased 6.7% year-over-year in January 2022, from 9,608 to 10,252.
Nationally, total existing-home sales transactions completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 6.7% from December to a seasonally adjusted annual rate of 6.50 million in January. Year-over-year, sales fell 2.3% (6.65 million in January 2021).
Statewide, the median sale price for single-family homes was $375,000 in January 2022, up 23% from 305,000 in January 2021. The median sale price for Florida existing condos rose 23.9% to $285,000 in January 2022 from $230,000 in January 2021.
Nationally, the median existing-home price for all housing types in January was $350,300, up 15.4% from January 2021 ($303,600), as prices rose in each region. This marks 119 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 99% in January 2022, up 2.4% from 96.7% last year. The median percent of original list price received for existing condominiums was 99%, up 3.8% from 95.4% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 15 days, a 44.4% decrease from 27 days last year. The median time to sale for single-family homes was 59 days, a 18.1% decrease from 72 days last year.
The median number of days between the listing date and contract date for condos was 14 days, down 66.7% from 42 days. The median number of days to sale for condos was 59 days, a 30.6% decrease from 85 days.
Palm Beach Cash Sales 95.1% More than National Figure in January 2022
Cash sales represented 52.7% of Palm Beach closed sales in January 2022, compared to 44.6% in January 2021. About 27% 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 63.4% of all Palm Beach existing condo sales and 42.6% of single-family transactions.