Boca Raton and Palm Beach County Real Estate Market Update - December 2018
Sales Slowdown Indicating Housing Cycle Has Peaked... Buyer's Market Ahead!
In taking a closer look at the internal numbers, here are the local market indicators we are seeing:
- The median sales price of a single family home in Palm Beach County was $344,700... Down slightly from the higher prices of earlier this year.
- The number of housing units sold was down sharply from the same month last year, further indicating a market slowdown.
- The inventory of homes for sale in Palm Beach County increased to a 5.1-month supply of houses on the market. So you know, 6 months is considered to be a balanced market. There were 7,344 houses for sale in December, an increase over the same period one year ago.
- Trends were a little different in the condo and townhouse market: The typical Palm Beach County condo that sold in December fetched $179,750, up 8% from this time last year.
- Luxury homes, however, are continuing to take significantly longer to sell.
- Rising interest rates (we had 4 rate increases in 2018) are beginning to bite into the first time homebuyer segment of the market as well as move-up buyers. Additional rate increases by the Federal Reserve in 2019 is anyone’s guess at this point, depending on the severity of the wider economic slowdown.
On A National Level:
- Recent data this past week revealed existing home sales are down 6.5% - the largest drop in about 10 years!
- Homebuilder stocks continue to take a beating since equity markets peaked in early October, further indicating the weakness in that sector.
- The yield curve is flattening with the distinct possibility of an inverted yield curve on the horizon which has traditionally been a warning of a recession ahead.
- Equity markets have all recently been in correction territory with many companies now announcing slowing growth worldwide.
As we continue to look for clear trends and market changes our summary takeaways remain the same:
- We are seeing continued housing affordability issues due to high prices and rising interest rates coupled with slow wage growth.
- An ongoing shortage of affordable single family home inventory continues to create headwinds for the housing markets.
- The market is still behind on new construction which is not keeping up with demand and adding further pressure. This is coupled with significantly higher costs to build (specifically, land, wages, materials and interest costs). Homebuilders are therefore constructing higher priced units in order to respond to both increased demand and building cost concerns.
- Another headwind for the market to absorb is the increasing Interest Rate environment with 30-year mortgage rates reaching 5% recently (up from 3.88% a year ago) with predictions taking us above 5% in 2019, representing the highest levels in 10 years!
- Finally, the sales slowdown indicates the inevitable transition to a Buyers market that we have been talking about for some months now, with price declines and increasing inventory levels along with properties sitting on the market for extended periods of time.
Here is a quick video going into more depth of current economic indicators:
Review the Palm Beach County Market Statistics for October in Detail Here:
The Palm Beach County market statistics are courtesy of your REALTOR®, a proud member of the Realtors® Association of the Palm Beaches (RAPB). RAPB represents over 14,000 members involved in all aspects of residential and commercial real estate.