Boca Raton and Palm Beach County Real Estate Market Update - March 2019
Closed Sales Down Sharply As Inventory Surges
let’s take a closer look at the local internal real estate market numbers, this is what we are seeing:
- The median sales price of a single family home in Palm Beach County last month was $350,000, about the same levels as a year ago.
- The number of housing units sold was down sharply (8.9%) from the same month last year, further indicating a market slowdown.
- The inventory of homes for sale in Palm Beach County increased to a 5.7-month supply of houses on the market. So you know, 6 months is considered to be a balanced market. There were 7,959 houses for sale in March, a significant increase of 12% 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 March fetched $175,000.
- Luxury homes are continuing to take significantly longer to sell.
- The amount of time it took to get a contract jumped over 10% versus last year.
Clearly (as we mentioned last month), the housing market is facing some headwinds and some significant downward pressure in the marketplace.
Consider these 3 important factors:
- We have definitely reached the top of Real Estate Cycle - 2008-2018. Note: each 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%. As we know, less qualified people equals less buyers.
- Buyers have Price Fatigue - Property values have increased more than 40%+ since 2008, however wages have simply not kept pace with about a 10% increase. Something has to give, either people get paid more or home 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 will continue to Increase, prices will soften and properties will likely sit on the market for extended periods of time.
Finally – 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.
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.