More people boating than buying real estate

It really is hard to believe that we are already half way through July, Time is really flying by and that is a good thing if you are in the business of real estate. It’s the time of the year that we see pending home sales fall. As of July 15th, they have fallen for three straight months. Over the past month, the number of homes under contract in the Jupiter area has dropped by 12%. That is a bigger decline than we saw over the same period last year. Of bigger concern is that the total number of homes under contract in the Jupiter is significantly lower than last year.

blog photo

One reason we hear that is causing the decline in sales is limited inventory. As of today, inventory levels are down for 5 straight months and the smart money says these declines will continue for another couple months. We have not seen available inventory this low since October. However, the number of homes on the market is almost exactly where we were last year.

If inventory levels are the same as a year ago and pending home sales are 12% lower then you cannot entirely blame inventory for the lack of sales. Paradise Sharks is marketing a condo beachside in Jupiter that is priced $20,000 below the median sales price over the past year. Our list price is lower than 87% of all sales in the community over the past 2 years. Median condo prices in the Jupiter area are up about 14% over the past two years. It isn’t moving and it’s not because of inventory.

Median homes prices in the Jupiter area have been moving higher all year but we are starting to see them pull back slightly. Once again, the summer slow down doesn’t help. Interest rates are up about a half a point since January but fell again last week for the 4th straight week. Remember when the Fed raised interest rates again back on June 13th. Since then the average overnight rate of a 30 year conforming loan is down 10 basis points. Buyers should be rejoicing and writing contracts, but they aren’t.

Those who regularly read Paradise Sharks weekly updates know we closely follow sales of properties that sell for over a million dollars. The reason is simple. They are a leading indicator of where the overall real estate market is headed. Last year the number of these sales set a new record. We had been way ahead of last years record pace but both May and June saw lower sales of these luxury homes than in 2017. We still remain 6% above last year’s numbers but we had been much higher. On May 1st, we were 20% above 2017 numbers but over the past couple months we have given back a lot of those gains. Inventory is not an issue here, as properties with list prices over a million dollars it is well above 12 months.

No clear signal where this market is headed, There is no doubt in many neighborhoods there is a true lack of homes in excellent condition. Keep a close eye on luxury sales. If you listen to the Fed, interest rates will continue to rise. A significant move higher could have a serious effect on real estate prices.

One thing is certain. If you are doing anything real estate, you need to be working with a broker who has your best interests as their main focus. Interview at least 3 brokers and ask a lot of questions. Make sure you are making educated decisions. If you are doing real estate anywhere in Palm Beach or Martin County, Paradise Sharks would love the opportunity to earn your trust and your business. We love to interview and you can set yours up today at tom@paradisesharks.com or 561.308.0175.

 

Fins up…..

 

 

#jupiterrealestate

Advertisements

Home inventory remains a huge concern

July 1st has dawned. Half of 2018 is already over and what a ride it has been for home prices here in the Northern Palm Beaches. Median single family home prices began the year at $436,000 and six months later they sit at $500,000.On January 1st, the median condo price was $216,000 and today that number has moved up to $245,000. 

inventory

Big increases, and no doubt the lack of quality inventory is one of the main reasons prices have been pushed so high. And it’s not going to get better, at least for another month, and probably longer. We never see inventory levels climb in July and no reason to think buyers will have better options a month down the road. As of July 1st, home inventory levels in the Northern Palm Beaches are down for the 4th straight month. 

Inventory certainly plays a significant role in both sales and prices and we already see what has happened to home prices so far this year. Keep in mind, that over that 6 month period interest rates are up about 15% so not only are buyers paying more initially, over the long term, those with a mortgage, are paying more. A lot more. If you borrowed 80% for thirty years, on the purchase of a median priced single family home in January and paid it off over that 360 month period your total payments would equal $587,956. However, if you bought the median priced home today, at today’s interest rates your total payments would be $721,947. Same median priced home just with different timing by six months. I won’t even tell you about the additional $12,800 today’s buyer will have to come up with for that 20% down payment and that it would be worth $73,517 if invested at 6% for the length of the loan.

These are the numbers that today’s homebuyer faces here in the Northern Palm Beaches and are part of the reason we are seeing sales start to slip. Not only are pending home sales down again, for the second straight month, the drop over the past 30 days has been significant. Down 20% over the past month. Certainly some of this is seasonal factors but this year the drop this year compared to last was significantly larger.

Pending home sales are down to the lowest levels we have seen since January and are most likely to continue falling over the next few months. Interest rates and seasonal factors certainly are responsible to some degree but the fact there just isn’t much good for buyers to select from is the biggest concern for the local real estate market. Homeowners who might want to upgrade are remodeling instead of moving, in large numbers. Recent studies by Houzz show that over half of all home owners plan to renovate their homes this year. That is a huge number and yes, inventory concerns affect the market in many ways.

So 2018 is half over and both home prices and interest rates are significantly higher. Home affordability and inventory levels are concerning. A very favorable economy has been a huge boost for real estate and for that boost to continue the economy needs to keep improving. The effective cost of buying a median priced single family home for someone in Jupiter who stays for 30 years just jumped by $200,000. It’s going to take a smoking hot economy to push these numbers higher.

Each neighborhood is different. Each home is different. There are no easy answers and anybody doing real estate in today’s market needs to be educated. Interview at least three brokers, seek answers and you will reduce your chances of making expensive mistakes. Paradise Sharks love to be interviewed so feel free to contact us anytime at 561.308.0175 or tom@paradisesharks.com. We won’t bite, I promise.

 

Fins up……

 

 

 

#homeinventory

 

Condo prices continue to climb

It is once again time to check on median condo prices in the Northern Palm Beaches. And once again it’s the same song we have been singing for about 6 months. Up, up, up like a hot air balloon. 

condo pricesd balloon

Over the past month, median condo prices in the Palm Beach Gardens area are up another 3.2% to $246,500. This brings the overall price increase over the past 6 months to a rather lofty 14%. The number of closed sales has also been rising for 5 consecutive months and over the last month sales are up 10.4% over year ago numbers. 

Pending home sales have been falling which means we will have fewer closings in the months ahead. Will prices be able to continue their climb is the big question. Watch for higher prices again next month but after that watch closely.

The next 8 months will bring slower sales with the next big boost in pending condo sales coming about the middle of January. Buyers remain cautious and there are still relatively few well priced units in great condition for buyers to select from. 

Interest rates have trended slightly lower this week but with the Feds latest direction may be heading higher. If they rise much from these levels, watch for them combined with high home prices and limited inventory to be a drag on the market. We have seen the rise in rental prices start to level off in the Northern Palm Beaches as affordability becomes a huge factor.

If you are even thinking about doing anything real estate, please speak with at least three brokers. Sellers need to understand that 6% is no longer the “going rate” for commissions and very high quality services are available to them at far lower prices. Buyers need to understand the importance of having a game plan and the ability to play their hand properly in order to get the home they want. Paradise Sharks loves to educate and would be honored to assist you with any of your real estate needs throughout Palm Beach or Martin County. Please feel free to reach out to us anytime at 561.308.0175 or tom@paradisesharks.com.

 

Fins up…….

 

 

 

#palmbeachgardenscondos

Is a slowdown underway for real estate in paradise

June is the month we almost always see the largest number of single family home sales in the Northern Palm Beaches. In Jupiter, we have to go back to 2011 to find a year where that didn’t happen, and there is no reason to believe that this year will be any different. We still have half a month to watch, but even after the final count is made, things appear to be slowing down for real estate here in the Northern Palm Beaches region.

Another Day in Paradise 2

Let’s take a look at pending home sales, they are down over the first half of June by about 11%. Sure, some of this is seasonal and somewhat expected.  But last year, over the same period, they were down by 3%. Over the past month, pending home sales in the Jupiter area are down by 15%. Last year its was 9%. There are fewer buyers writing contracts and at this moment the total number of pending contracts is a full 9% behind 2017 numbers. There is no doubt that home buying activity in the Jupiter area has slowed significantly, but why?

Fingers are pointed at inventory levels that are down for the 4th straight month. There are 3% fewer homes for buyers to select from than 1 year ago. Not only are there fewer homes to buy, but there are fewer quality homes to select from. I know we have been telling you this forever, but a large number of available properties need work. Work that many buyers do not want to tackle, or can’t afford to. 

As prices rise, and home prices in the area are up rather dramatically since December, more and more buyers are stretching financially to get offers accepted. Buyers stretched on purchase price don’t have the ready cash to take a fix-it to do list and tackle it. The good news is we are starting to see prices level out and buyers can hope that continues for a while.

Interest rates are also playing a role in any slow down and will continue to do so. The Fed, on Wednesday, raised their benchmark interest rate by a quarter of a point, the second increase of the year. Even more telling, is they are planning more and faster increases coming our way. Interest rates on conforming 30 year fixed loans were up again this week to 4.49%. Starting to look like, at least for now, that 4.5% is about the lowest we can expect to see and 5% is a very good bet before too long. Higher interest rates put a damper on real estate sales, especially when affordability is already a big concern.

Another key metric we watch closely here at Paradise Sharks is the number of properties that close each month with prices above a million dollars. Last year was a record breaking one in this category and so far this year, sales are 12% above last year’s record pace. During the month of May, the total sales of these homes slowed and was down about 9% from last year. Watch these numbers closely as if they start to falter significantly, so will the overall market.

However, the economy remains on solid footing and appears to be getting even stronger. Unemployment is down to levels nobody would have believed a year ago. Inflation remains low, but picking up a bit of steam, climbing in May by 2.2%. So far in 2018, the real estate market has been great for price appreciation but a bit lackluster for the number of sales. Things change by the minute and buyers and sellers have much to keep track of. If Paradise Sharks can ever help simplify a process that really should not be difficult please feel free to contact us. We are super easy to reach at tom@paradisesharks.com or 561.308.0175.

 

Fins up…….

 

 

#paradise

Median home price in the Northern Palm Beaches hits $500,000

Talk about a benchmark. I am giving away my age, but as a recent college graduate, with interest rates around 18%, I purchased my first home. It needed some work but had great square footage, and a wonderful lot, in a great neighborhood. It was in Iowa, but still the purchase price was $42,000. Back then a half a million dollars was real money and if you had a home worth that much you were living in a mansion. You had the world by the tail.

Blog photo LOGO

Fast forward to today, and the median single family price in the Northern Palm Beaches is there. $500,000, with half of all sales below that number and half above. The “median” house in our area looks something like this is today’s world. It has a little over 2,000 square feet, three bedrooms, 2 bathrooms, was built in the early 1990’s and has a two car garage. Location, quality of construction and a whole host of other factors work into the price equation but that’s basically what you can expect for a half a million bucks.

The median single family home price in the area sits right at $500,000 and is up for six straight months. Compared to last year, prices are up 9.9%. Substantial gains both long term and short term. The cost of buying a home in paradise is moving higher and at another all time record high. How important is location? Plenty. In Jupiter, the median single family home price sits at $525,000. It’s the same in Tequesta while in Palm Beach Gardens the median sales price sits at $480,000. Each city, each neighborhood, each home plays by a different set of rules. If you are doing anything real estate it’s critical you understand that. 

Interest rates are trending higher but there have not been any huge weekly moves. The average overnight rate on a 30 year fixed conforming loan sits at 4.46%. Still historically low, but a full 110 basis points above the 3.36% you could get a mortgage for back in the good old days. I still don’t see any huge jumps but no doubt we could see rates hit 5% by the end of the year. We have this spending problem in Washington and each 1% increase in rates costs the taxpayers an additional $210 billion dollars on a budget that hasn’t been balanced since who knows when.

Condo prices also are on the rise and closing in on the $250,000 mark here in the Northern Palm Beaches. There are serious supply issues and in most areas finding a home in great condition is a very difficult task. You go out and look at 5 homes and if you are lucky, one of them might be in what you consider great condition. It’s usually priced a bit above the market and buyers are reaching and that is causing prices to rise. Locally new construction is even more expensive, with builders forced to look for savings in order to get prices down. Please make sure that even when buying a new home you have it professionally inspected before in closes. If you are working with Paradise Sharks as your broker, on any new construction sale, just ask me and I will pay for the inspection. It’s that important.

Sales are slowing as we head into the historically quieter summer months. If you are even thinking about buying, or selling, in this market, please seek knowledge and make educated decisions. Interview at least 3 brokers and ask a lot of questions. There are great opportunities for those properly positioned and prepared to act. Paradise Sharks loves to be interviewed so please feel free to contact us anytime at tom@paradisesharks.com or 561.308.0175.

 

Fins up……

 

 

#jupiterrealestate

Fewer for sale signs as Jupiter home prices continue to rise

June has arrived and that means so many things. It means that today is the last day of the year for public schools in Palm Beach County. It’s the official kick off of the 2018 hurricane season. Its even National Doughnut Day. In the world of real estate, June almost always means the largest number of single family home closings in Jupiter during any month. We fully expect that the traffic in closing agents offices will be very strong over the next few weeks.. 

blog photo

As of today, the number of homes for sale in the Northern Palm Beaches fell over the last half of May by 3.8%. Compared to the 5.6% drop we experienced last year over the same period it’s about as good as the inventory news gets for prospective home buyers. Current inventory levels are 2.8% lower than on this date in 2017 and we expect further drops over the next 3 months.

There has also been slower activity from buyers which we fully expect because of seasonal factors. Pending home sales in the Jupiter area have dropped 5% over the past two weeks but again a smaller drop than the 6.2% reduction we experienced last year. The number of homes under contract are trailing 2017 numbers by 1.2%.

Pricing pressure remains firmly to the upside in both the condominium and single family market segments. The median single family home price in the Northern Palm Beaches has hit $500,000 for the first time ever and are up 14.7% over the past 5 months. Median condo prices are up 13.4% over the same period and closing in on the $250,000 threshold.

This week, interest rates were down 13 basis points, which is a fairly significant drop. With median prices on the upswing, and inventory levels on the downswing, buyers have been forced to pay a premium price for their dream home. Improving economic news with the unemployment level today down again to the lowest levels we have seen in 18 years. The economy has a better foundation than we have seen in many years and is helping to bring buyers back into the market and push prices higher.

With prices and interest rates both in upward trends and the summer months upon us we expect to see some consolidation in the weeks ahead. If you are doing anything real estate, make sure you understand the specific numbers and market trends that effect each property you are dealing with. If Paradise Sharks can be of help in any way please feel free to contact us at tom@paradisesharks.com or 561.308.0175.

 

Fins up………

 

 

#jupiterhomeprices