May Home Sales in North Palm Beach up by 18%
As we sit here with only a week we go until we flip the page to July the south Florida real estate market remains quite vibrant. Constantly changing, it is that time to look back on the final sales number for the previous month to see just what has happened since our last report. No doubt inventory levels remain a main topic around the water coolers of brokerage offices throughout Palm Beach and Martin Counties.
But there is other news and perhaps the most significant when it comes to the future direction of the market relates to interest rates. This morning we wake with the average overnight rate on a 30 year fixed mortgage hitting levels we have not seen for an amazing 94 weeks. Sitting at 4.24% we are up a very significant 22 basis points from week ago levels. While we have been spoiled with rates that have been manipulated by the Fed’s monetary policies there have been strong signs that their aggressive purchases of our debt, totaling 3.4 trillion dollars, may be coming to an end. And if these purchases do get cut back watch for more turmoil in the bond markets. You see the United States is a debtor nation and when we spend money somebody has to finance it. If not the Fed then others will have to come to our auctions and most signs point to those investors requiring higher returns. The outcome is clear when that does happen and that is higher interest rates and those jumps could be significant.
Many economists see rates settling in a range between 4% to 5% over the next year but we must prepare for would could be much higher borrowing costs. In the real world let’s look at how interest rates affect a borrowers ability to purchase a home. Rates have been up now for 7 straight weeks and back when this trend started a borrower who was approved for a mortgage payment of $1,000 per month could afford a home with a $225,000 mortgage. This morning they arise to find out that number is now down to $203,500. With prices of homes still on the rise this is a significant change.
While inventory levels in the north county region dropped again, as detailed in our articles published earlier this month, there are signs we may start seeing more choices for buyers which is great news for those out shopping for a home. With prices up significantly over the past 12 months more and more sellers are starting to enter the fray. While this trend has been more significant in other markets we are starting to see the winds of change locally. We see more and more listings at prices significantly higher than the most recent comparable sales and in many cases sellers are seeing success.
As prices continue to rise more and more sellers find themselves with homes that are no longer “underwater” and they can finally afford to sell them and make a move they had hoped for. And some of those purchases are by Wall Street Firms like Blackstone who already has purchased nearly 30,000 properties and just obtained financing of $1.5 billion dollars to purchase more. So while Wall Street sees value we continue to monitor the markets closely as they can change quickly as we have seen with the recent moves in interest rates. The market has been very strong and this strength has been driven by pent up demand, fueled by low interest rates and prices that are still attractive. Buyers have a stronger sense of urgency and inventory, including new construction remains very tight. But again the two major metrics that have created this rebound are changing; interest rates and prices are moving higher.
So without further adieu let’s take a look at home sales in North Palm Beach and the surrounding communities for the month of May and see what has happened since our last report.
North Palm Beach – up 18%
Palm Beach Gardens – up 10%
Hobe Sound – up 3%
Jupiter – down 5%
Tequesta – down 17%
Last month we reported that 80% of our reporting communities showed stronger sales with many reporting new multi-year highs. During the month ending June 1st we saw weaker numbers but there was much discrepancy as inventory levels are different in each neighborhood. This month 60% saw higher sales with the average number of sales increasing by 2% with a median increase of 3%. We next move in this months report to home sales in North Palm Beach that increased 18% on the heels of last month’s decrease of 45%. During the month of May a total of 13 North Palm Beach single family homes sold compared with 11 during the previous month. With this showing we stayed slightly ahead of the 12 month average sales volume which currently stands at 12.83. On a “seasonal” note home sales in North Palm Beach also ended up well above the 9 sales we had in the same month in 2012.
As we saw sales volume increase in North Palm Beach we saw the heaviest activity in homes priced between $150,001 and $300,000 and those with price tags above $1,000,000 with 8 sales representing 62% of the market. With this showing the median sales price decreased significantly to $340,000 from last months very strong number of $575,888. We fell just below the 12 month average which now stands at $356,107. From a “seasonal” perspective we also remained well below the median sales price from May of last year which came in at $430,000. Below are the charts showing the percentage of single family home sales in each category for the month of May as well as median prices over the past 12 months in North Palm Beach.
We’ll keep our eyes on the I’s (inventory and interest rates) as they will combine to see where we head in the months ahead.
Fins up until July…………