Boca Raton and Palm Beach County Real Estate Market Update - July 2019
Summer Sales Activity Provides a Nice Bounce as Inventory Tightens and Interest Rates drop
Let’s take a closer look at the local internal real estate market numbers. What we’re seeing is the following:
- The median sales price of a single family home in Palm Beach County was $355,000, down slightly from last month, but slightly higher than a year ago.
- The number of housing units sold experienced a really nice bounce from last month and significantly from one year ago.
- The inventory of homes for sale in Palm Beach County has tightened once again with a drop on the number of active listings and overall supply of homes.
- Trends were a little different in the condo and townhouse market. The typical Palm Beach County condo that sold in July fetched $185,000, down slightly from last month, but higher than a year ago.
- Luxury homes are continuing to take significantly longer to sell.
- The amount of time it took to get a contract jumped again versus last year for single family homes with properties now taking closer to 60 days to get a contract.
- Interest Rates for a 30-year fixed rate mortgage are now under 4% which is helping to maintain buyer demand despite elevated prices and limited inventory.
What Does This Mean for Sellers?
These stats highlight how important it is to price your property competitively, meaning very close to what has sold most recently. In this marketplace that we are in right now, it really is a beauty contest and a price war along with having great marketing as well.
Clearly the housing market continues to face some headwinds and some significant downward pressure in the marketplace.
Once again, it is important to consider these 3 important factors:
- We have definitely Reached the Top of Real Estate Cycle - 2008-2018. Note: Each RE Cycle is 7-10 years, so it makes sense that we are starting our downward leg.
- We’ve reached the Top of Debt Cycle. 4 interest rate increases in 2018 (9 in all by the FEDERAL RESERVE) have now created headwinds with consumers highly leveraged. Note: Every 1% increase to the mortgage rate impacts buying power by 10%, meaning less qualified people equals less buyers.
- Buyers have Price Fatigue. Property Values have increased more than 40%+ since 2008 and yet wages have simply not kept pace, perhaps 10%. So something has to give, either people get paid more or prices have to come down....Which do you think is more likely?
Looking Ahead For the Rest of 2019 As It Relates to Housing
We can certainly extrapolate some themes here:
First - The average household’s cost to service debt has reached a point at which it will become more difficult and challenging to find buyers who can qualify for a conventional mortgage (FNM, FRE, FHA).
Second - Housing affordability issues will continue to be a theme going forward.
Third – Inventory concerns will continue to act as an overhang on the market, prices will soften and properties will likely sit on the market for extended periods of time.
Fourth – The effects of the worldwide economic slowdown will be felt here in the USA throughout 2019 and into 2020 and will have a knock-on impact for the housing market.
Finally - The inversion of the yield curve is flashing recessionary signals with a number of companies also expressing earnings worries and job layoffs.
Furthermore, the Federal Reserve recently cut the Fed Funds Rate as tariffs and global economic slowdown concerns continue to place downward pressure on markets. Will they continue to cut interest rates or will the divided committee hold at current levels?
Going forward we will definitely be keeping a continued close watch on prices, interest rates, inventory levels and the number of closed sales.
Here is a quick video going into more depth of current economic indicators:
Review the Palm Beach County Market Statistics for March 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.