October Home Sales in North Palm Beach Fall Dramatically by 64%
Our best wishes to all our friends and hope that you enjoyed a fabulous Thanksgiving with your friends, neighbors and family. It is the best time of the year to reflect on all that we have and give thanks for our many blessings. For our Jewish friends in the middle of Hanukkah we wish you a very special holiday.
There are so many factors that have an effect, either direct or non-direct, on the real estate market. The changes are at times lightning fast and like a NFL running back easily cutting in another direction. The industry has been the foundation which the overall economy has relied on over the past 18 months. But as we have reported here the market changed again about three months ago with sales stalling even as we saw inventories increase substantially off their multi-year lows. The government shut down caused by the debt-ceiling crisis that was kicked down the road a bit no doubt gave many reason to pause and wonder if right now was a good time to invest in a new home. The bad news is this “crisis” will be hitting us smack between the eyes early next year creating another round of negative consumer sentiment so we pray for our elected officials to start working together for a long term solution.
This week interest rates remained relatively unchanged and still historically a bargain. However the Fed again is hinting they may start slowing their bond purchases in the not too distant future. Still rates are up a full point since the first “hint” and we believe the Fed is in a tight spot. Any significant pull back on their purchases could drive rates much higher and with that the interest payments on our national debt. Janet Yellen will most likely make it through her confirmation and take over for Ben Bernanke as of January 31st and she will be jumping into a very hot seat.
Here in southern Florida our market is a bit different than many parts of the country and therefore plays by it’s own set of rules. International buyers are a huge factor as they have cash and want to invest it somewhere that looks relatively safe compared to other investment vehicles. The international view, as the dollar slides in relationship to some other currencies, is the odds for potential appreciation are very good. The available supply of homes is constrained by the fact there is very little undeveloped land in Palm Beach County and coupled with a steadily increasing demand points to higher prices ahead.
Throw in they steady flow of baby boomers that will be the driving force in helping Florida become the third most populated state within the next 2 years. Look for New York to slide to number 4 as our population heads north of the 20 million mark. It is easy to see why large corporate investors like Blackstone are making huge bets in real estate prices moving higher.
As we have seen sales slide over the past few months we continue to juggle signs for optimism and those pointing towards harder times ahead. Home sales in North Palm Beach and the surrounding villages first started to show weakness in July with significant drops again last month. Now that the final numbers can be tallied for the month ended November 1st let’s see where the market headed last month.
Palm Beach Gardens –
Hobe Sound –
North Palm Beach – down 64%
Last month in this column we reported that 80% of our reporting communities showed weaker sales with a spread of 40% between the best and worst performing municipalities. That was a smaller spread than we had been seeing in what has become a very volatile market. This month we have 60% of our communities showing a decline in sales but this month the spread grew dramatically to 96% which shows volatility is still out there. Once again this volatility points to inventory as a major contributor to sales numbers and that is amplified when we look at the diversity in sales numbers this month in neighboring communities.
We begin this months report with home sales in North Palm Beach that fell dramatically by 64% on the heels of last month’s jump of 8%. During the month of October a total of 5 North Palm Beach single family homes sold compared with 14 during the previous month. With this showing we fell far below the 12 month average sales volume which currently stands at 11.5 On a “seasonal” note home sales in North Palm Beach were also far below the 11 sales we had in the same month in 2012.
As we saw sales volume decrease in North Palm Beach we saw the heaviest activity in homes priced above $1,000,000 with 2 sales representing 40% of the market. With this showing the median sales soared to $960,000 up 311% from last months number of $233,750. This was a new 42 month high and obviously far higher than the 12 month average which now stands at $400,378. From a “seasonal” perspective we also remained well above the median sales price from October of last year which came in at $172,000. 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.
The next 3 to 4 months will be critical as we see how many of our seasonal visitors decide to make a long term investment in south Florida real estate. Fins up until December………..