The Miami Association of Realtors recently reported that Palm Beach County Florida's total home sales in July 2022 decreased year-over-year when compared to last summer. July 2022 sales were down year-over-year, from 3,315 to 2,222.
Single-family home sales decreased 32.9% year-over-year, from 1,774 in July 2021 to 1,190 in July 2022, due to lack of inventory and rising mortgage rates. Palm Beach existing condo sales decreased 33% year-over-year, from 1,541 in July 2021 to 1,032 in July 2022, due to lack of inventory and rising mortgage rates.
In July 2021, Palm Beach sales surged to a record-high because of 3% mortgage rates, higher supply (particularly in condos) and pandemic-driven demand.
In July 2022, Palm Beach sales were impacted by higher rates of 5-6% when contracts were established in May and June and lower inventory.
South Florida: A Bargain in Comparison to Other Global Cities & U.S. Metros
Miami-Fort Lauderdale-West Palm Beach's price per square meter is $3,170, far below at least 30 global cities and 13+ U.S. Metros including markets such as Hong Kong ($28,570), New York City ($17,191), San Francisco-Oakland-Hayward, CA ($8,250), Madrid, Spain ($6,173), Los Angeles-Long Beach-Glendale, CA ($4,740) and Seattle-Tacoma-Bellevue, WA ($4,460), according to National Association of REALTORS Profile of International Transactions in U.S. Residential Real Estate 2022.
Palm Beach County single-family home median prices increased 20% year-over-year in July 2022, increasing from $500,000 to $600,000. Existing condo median prices increased 24.8% year-over-year, from $233,000 to $290,777.
While median prices have increased nationally so has house-buying power because of a long-run decline in rates before March 2022 and the slow, but steady growth of household income. West Palm Beach (No. 5) and Miami (No. 6) ranked among the Top-10 U.S. metros where homebuyer income grew the most during the pandemic via Aug. 2022 Redfin report.
Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Inventory for Palm Beach single-family homes (2.7 months) and condos (2 months) are low. Also, one of the supports for home prices is rents and rents are rising strongly.
Locally, the greater share of South Florida luxury sales is also part of the reason for the large year-over-year increase in median prices.
To battle national inflation, the Federal Reserve has aggressively raised rates this year and has plans for more hikes. High inflation and the Fed's tightening policy are the main drivers behind rising mortgage rates.
Mortgage rates have risen from 3% in January to near 6% in July. On the same $300,000 mortgage, the monthly payment has risen from $1,265 in December to $1,800 today, according to NAR.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.41% in July, down from 5.52% in June. The average commitment rate across all of 2021 was 2.96%.
The mortgage rate is projected to land at 5.3% by 4Q 2022, according to NAR. That is still low compared to an all-time average of about 8% in the U.S.
Long term, the hope is higher rates will lead to more days on the market (gives buyers more choices). Higher rates will eventually lead to a moderation of the growth rate of pricing. With the growth rate of pricing cooling, total inventory could grow later. Historically, inventory expands six months after rates rise, but today's market is unlike any other.
Palm Beach Total Active Listings Rise: A Great Sign for our High-Demand Market
Inventory of single-family homes increased 54.6% year-over-year in July 2022 from 2,493 active listings last year to 3,854 last month. Condominium inventory increased 20% year-over-year to 2,708 from 2,256 listings during the same period in 2021.
New listings of Palm Beach single-family homes increased 2.1% to 1,980 from 1,940. New listings of condominiums decreased 6.2%, from 1,598 to 1,499.
Months' supply of inventory for single-family homes increased 80% to 2.7 months year-over-year, which indicates a seller's market. Inventory for existing condominiums increased 33.3% to 2 months, which also 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 July 2022 increased 38.2% year-over-year, from 4,749 to 6,562.
Nationally, total housing inventory at the end of July was 1,310,000 units, an increase of 4.8% from June and unchanged from the previous year. Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 2.9 months in June and 2.6 months in July 2021.
Palm Beach Real Estate Posts $249.9 Million Local Economic Impact Just in July 2022
Every time a home is sold it impacts the economy: income generated from real estate industries (commissions, fees and moving expenses), expenditures related to home purchase (furniture and remodeling expenses), multiplier of housing related expenditures (income earned as a result of a home sale is re-circulated into the economy) and new construction (additional home sales induce added home production).
The total economic impact of a typical Florida home sale is $112,500, according to NAR. Palm Beach County sold 2,222 homes in July 2022 and had a local economic impact of $249.9 million.
Palm Beach total dollar volume totaled $1.5 billion in July 2022. Single-family home dollar volume decreased 22.3% year-over-year, from $1.5 billion to $1.1 billion. Condo dollar volume decreased 27.3% year-over-year, from $563.1 million to $409.6 million.
Palm Beach Distressed Sales Keep Dropping, Reflecting Healthy Market
Total Palm Beach distressed sales decreased 59.1% year-over-year in July 2022, from 22 to 9. Short sales and REOs accounted for 0% and 0.4% year-over-year, respectively, of total Palm Beach sales in July 2022. Short sale transactions decreased 100% year-over-year while REOs decreased 35.7%.
Only 0.4% of all closed residential sales in Palm Beach were distressed last month, including REO (bank-owned properties) and short sales, compared to 0.7% in July 2021. In 2009, distressed sales comprised 70% of Miami sales.
Palm Beach's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented approximately 1% of sales in July, essentially unchanged from June 2022 and July 2021.
Palm Beach's Percentage of Sales Continue to Outpace the Nation, State
In Florida, closed sales of single-family homes statewide totaled 23,705, down 22.9% year-over-year, while existing condo-townhouse sales totaled 9,341 down 30.7% over 13,481 in July 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, slipped 5.9% from June to a seasonally adjusted annual rate of 4.81 million in July. Year-over-year, sales fell 20.2% (6.03 million in July 2021).
The statewide median sales price for single-family existing homes was $412,303 up 16.1% 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 $305,000, up 20.6% 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 all housing types in June was $403,800, up 10.8% from July 2021 ($364,600), as prices increased in all regions. This marks 125 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 98.2% in July 2022, down from 100% in July 2021. The median percent of original list price received for existing condominiums was 99%, up 1.3% from 97.7% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 14 days, up 40% from 10 days last year. The median time to sale for single-family homes was 57 days, even with last year.
The median number of days between the listing date and contract date for condos was 12 days, down 20% from 15 days. The median number of days to sale for condos was 54 days, a 11.5% decrease from 61 days.
Palm Beach Cash Sales More than Double National Figure in July 2022
Cash sales represented 51% of Palm Beach closed sales in July 2022, compared to 48.3% in July 2021. About 24% of U.S. home sales are made in cash, according to the latest NAR statistics.
Cash buyers are not deterred by rising rates. 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 58.4% of all Palm Beach existing condo sales and 44.6% of single-family transactions.