Home Sales in North Palm Beach Drop 18% in October
With the elections behind us it is time to move forward and watch closely to changes coming our way. No doubt the landscape in America has changed and the challenges ahead for our elected officials are not easy ones. Besides the looming debt ceiling limit and expiration of the Bush Tax Credits coming our way there is another issue of great importance to the real estate industry both locally and nationally.
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation is set to expire on December 31st of this year. This Act allowed taxpayers to exclude income from the discharge of debt on their principal residence. As an example, if Joan and Jim had to short sale their property and their loan was for $300,000 and the short sale was approved at the now market value of $150,000 there has been no tax consequence since this Act was put in place 5 years ago. If Congress does not extend this Act as of January 1st Joan and Jim will have an additional $150,000 of taxable income.
Banks are required to provide this information to the Internal Revenue Service so this is a big change to what short sellers have enjoyed for the past 5 years. With the debt ceiling and tax issues already front and center the extension of this Act is not guaranteed but the best guess is it will be extended at least for a while.
As we have reported throughout the year we have seen a dramatic improvement of the local real estate market in Southern Florida. Especially in the May to August reporting periods sales have been strong even as inventories continued to drop to multi-year lows. Over the past couple months home sales in North Palm Beach and the surrounding areas have cooled a bit and we have seen slight increases in inventory throughout the region. Well priced single family homes in good condition remain as rare as getting a $2 bill in your change at the convenience store.
So with changes looming let’s take a look at home sales in North Palm Beach and the surrounding communities for the month of October and see what has happened since our last report.
Hobe Sound –
Palm Beach Gardens –
North Palm Beach – down 18%
Last month was the first time in a long time that we reported the volume of home sales in North Palm Beach and the surrounding communities all fell during the same month. This is certainly not what one wants to find in a market in recovery mode. So it is nice to see an about face with increases in 3 of our reporting communities while sales fell again in the other two. In October the median number of sales increased 3% in our reporting area with a much higher jump in the average sales figures fueled by a big month in Hobe Sound. We start this months report with home sales in North Palm Beach where sales volume dropped a significant 18% from September levels. This was the second straight monthly drop and that is the first time we have seen that since February. During the month of October a total of 9 North Palm Beach single family homes sold compared with 11 during the previous month. We have to go back seven months to find a lower monthly total of home sales in North Palm Beach which is a bearish sign indeed. With this mediocre showing we fall below the 12 month average sales volume which currently stands at 10.75. Comparing October to year ago numbers home sales in North Palm Beach were down 18% from the 11 sales we had in the same month in 2011.
As we saw sales volume drop in North Palm Beach we saw the heaviest sales activity in homes priced below $300,000 with 7 sales representing 78% of the entire market. With these sales the median sales price dropped to a multi-year low of $160,000 another somewhat bearish sign. With numbers like that we obviously fell far below the 12 month average which stands at $338,667. We also fell well short of the median sales price in October of last year which stood at $235,000. Below are the charts showing the percentage of single family home sales in each category for the month of October as well as median prices over the past 12 months in North Palm Beach.
Many kites in the local real estate sky and as always we will keep you up to date with which way the winds are blowing. The next few months will be key indicators of things to come in the new year.
Until next month…………