January was another good month for median single family home prices in the Northern Palm Beaches. Good news, as we head into the strongest buying season of the year, but plenty to keep your eyes on if you are concerned about the value of your home.
As of February 1st, the median sales price of a single family home increased to $454,000. Still well short of the most recent high of $478,863 back in September, but 6% higher than last years’ valuation. It was the second straight monthly increase, with the median price of a single family home in the Jupiter area up 4.2% over the past 60 days.
In a “normal” season, we watch for inventory being limited, demand strengthening and prices moving higher through early summer. This year, however, is hardly normal, as we have seen by wild falls in the stock market the past couple days and interest rates that, as of yesterday, had moved to the highest levels we have seen since July of 2014. Thankfully, they have backed off a bit overnight, but still up 7 basis points for the week.
Affordability remains a big concern. Interest rates present a growing concern as they are up 10% so far this year. A severe shortage of quality inventory at the lower end of the market is not getting any better. But, the top end of the market is where we really want to keep a close eye.
Market sentiment pull strongly from home sales at the upper end of the market. The reality is, sales above the $1 million dollar threshold, drive the market. When they fall, it usually hurts the market and thankfully it’s not often that they fall. When the stock market fell significantly in 2008, median single family home prices in the Jupiter area fell 19%. The following year the fell another 12%. They were the two worst years in history for home prices in the Jupiter area. They were also the two worst drop in history of million dollar home sales in the region. They dropped 37% in 2008 and another 39% in 2009. And they dragged the entire Jupiter area real estate market with them.
Let’s be clear, 2017 was a record year for million dollar home sales. This year is starting off great, with January bringing us a record number of million dollar sales for the month. But, change is in the air, and its significant enough change to make a difference in the value of your home. The huge drops in the Dow the past two days might just end up being no big deal, a blip on the screen. But they may signal the start of something bigger. The new tax law also could have huge ramifications on million dollar sales as we move forward.
Let’s pretend your rich Uncle Jimmy was moving to town and fell in love with that $3,500,000 waterfront home on the Loxahatchee River. Perfect layout, perfect view and the perfect dock for his boat with no fixed bridges between him and blue water. The estimated property tax bill of say $60,000 wasn’t a big deal. After all it’s tax deductible, Or it was. That all changed with the new tax laws, as now write offs for property taxes are included in that $10,000 maximum. Uncle Jimmy starts rethinking the whole deal.
So keep your eye on your homes value as it’s going to change. If interest rates stabilize and pull back from today’s levels, if the stock market corrects over the next couple days, it might not change too much. It may even go up for the 7th straight year. But, if they don’t and with the top end of the market losing their deductions, not only property tax but also some of their mortgage interest, the effects could be very, very significant. Remember those drops of 19% and 12% ten years ago.
Always have a strategy when buying, or selling, understand the numbers and what they mean. The signs are right in front of you and this morning the signs look pretty bearish on home prices moving higher right now. If Paradise Sharks can ever be of help with any of your real estate needs please feel free to contact us at 561.308.0175 or firstname.lastname@example.org.