Limited Supply Helps Stabilize Palm Beach County Home Prices During COVID-19 Outbreak

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While the latest data shows lower levels of closed sales compared to a year ago, new pending sales in May rebounded in comparison to April. New pending sales for Palm Beach single-family homes decreased 11.2%, an improvement over the April decrease of 54.6%. New pending sales for condos decreased 20% in May, an improvement over the 66.6% decrease in April.

"The Palm Beach County real estate market is already experiencing a remarkable recovery as evidenced by surging pending sales since mid-April despite the COVID-19 impact on May sales," JTHS-MIAMI President David Abernathy said. "Palm Beach County continues in a seller's market for both single-family homes and condos. Historically low mortgage rates, virtual tools and lockdown lifts have enabled many buyers to continue their home search process."

Pending sales, which started to surge in mid-April and are stronger than they were before the COVID-19 stay home orders, are expected to result in rising closed sales in the next couple of months.

Mortgage applications are on the rise in South Florida and nationally and the Miami mega region continues to see additional homebuying interest from the Northeast. Nationally, mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than one year ago, according to the Mortgage Bankers Association's seasonally adjusted index released June 17. That was the ninth consecutive week of gains and the highest volume in more than 11 years.

The COVID-19 situation has accelerated the trend of homebuyers from New York and other tax-burdened Northeastern states searching and purchasing homes in South Florida.

Before the COVID-19 situation, Palm Beach real estate had record low delinquencies, no subprime mortgage crisis, strong demand/low supply, low interest rates, strong population growth, demand from foreign buyers and tax refugees from tax burdened states, high consumer confidence and a strong job market.

Palm Beach County Median Prices Rise

Strong demand coupled with limited supply continue to drive price appreciation in Palm Beach.

Palm Beach County single-family home prices increased negligibly year-over-year in May 2020, increasing from $364,900 to $360,000. Existing condo prices increased 8.1% year-over-year, from $185,000 to $200,000.

Palm Beach County Total Home Sales Decrease

Palm Beach County total home sales decreased 52.2% year-over-year in May 2020, from 3,323 to 1,588. Palm Beach County single-family home sales decreased 47% year-over-year in May 2020, from 1,870 to 991. Palm Beach County existing condo transactions declined 58.9% year-over-year in April 2020, from 1,453 to 597.

Dollar Volume Decreases

Single-family home dollar volume decreased 41.3% year-over-year, from $1.1 billion to $649.9 million. Condo dollar volume decreased 50.2% year-over-year, from $412.5 million to $205.3 million.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.23% in May, down from 3.31% in April. The average commitment rate across all of 2019 was 3.94%.

A new condo approval process is expected to increase sales. The new guidance, which went into effect in October 2019, extends certifications from two years to three, allows for single-unit mortgage approvals, provides more flexibility with owner/occupancy ratios, and increases the allowable number of FHA loans in a single project. The changes, many of which MIAMI and NAR has championed, are expected to generate increased homeownership opportunities.

Palm Beach County Distressed Sales Stay Low, Reflecting Healthy Market

Only 3.5% of all closed residential sales in Palm Beach County were distressed last month, including REO (bank-owned properties) and short sales, compared to 2.6% in May 2020.

Total Palm Beach County distressed sales decreased 36.4%, from 88 to 56.

Short sales and REOs accounted for 0.6% and 2.9% year-over-year, respectively, of total Palm Beach sales in May 2020. Short sale transactions decreased 41.2% year-over-year while REOs decreased 35.2%.

Nationally, distressed sales represented 3% of sales in May, about even with April but up from 2% in May 2019.

Palm Beach County Real Estate Selling Close to List Price

The median percent of original list price received for single-family homes was 95% in May, up 0.4% from 94.6% last year. The median percent of original list price received for existing condominiums was 92.5%, down 1.2% from 93.6% last year.

The median number of days between listing and contract dates for Palm Beach single-family home sales was 37 days, a 28.8% decrease from 52 days last year. The median number of days between the listing date and closing date for condos was 52 days, a 7.1% decrease from 56 days.

The median time to sale for single-family homes was 84 days, a 13.4% decrease from 97 days last year. The median number of days to sale for condos was 94 days, a 4.1% decrease from 98 days.

National and State Statistics

Nationally, total existing-home sales transactions slumped 9.7% from April to a seasonally-adjusted annual rate of 3.91 million in May. Overall, sales fell year-over-year, down 26.6% from a year ago (5.33 million in May 2019).

Last month's closed sales of single-family homes statewide dropped 36.2% year-over-year, totaling 19,622, while condo-townhouse sales declined 50.3%, for a total of 6,069. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

The national median existing-home price for all housing types in May was $284,600, up 2.3% from May 2019 ($278,200), as prices increased in every region. May's national price increase marks 99 straight months of year-over-year gains.

In May, the statewide median sales prices for both single-family homes and condo-townhouse properties rose year-over-year for 101 consecutive months. The statewide median sales price for single-family existing homes was $270,000, up 1.5% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month's statewide median price for condo-townhouse units was $201,472, up 3.3% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Palm Beach County Cash Buyers Still More than Double National Figure

Palm Beach County cash transactions comprised 39.9% of May 2020 total closed sales, compared to 44.2% last year. The national figure for cash buyers is 17%.

Palm Beach County's high percentage of cash sales reflects South Florida's ability to attract a diverse number of international homebuyers, who tend to purchase properties in all cash.

Condominiums comprise a large portion of Palm Beach's cash purchases as 53.3% of condo closings were made in cash in May 2020 compared to 31.8% of single-family home sales.

Seller's Market for Single-Family Homes, Condos

Inventory of single-family homes decreased 18.6% in May from 7,184 active listings last year to 5,850 last month. Condominium inventory decreased 0.4% to 6,109 from 6,131 listings during the same period in 2019.

Months supply of inventory for single-family homes decreased 15.7% to 4.3 months, which indicates a seller's market. Inventory for existing condominiums increased 7.3% to 5.9 months, which indicates a seller's market. A balanced market between buyers and sellers offers between six- and nine-months supply.

Total active listings at the end of May decreased 10.2% year-over-year, from 13,315 to 11,959. Active listings remain about 60% below 2008 levels when sales bottomed.

New listings of Palm Beach County single-family homes decreased 9.7% to 1,931 from 2,139. New listings of condominiums increased 7.3%, from 1,600 to 1,716.

Nationally, total housing inventory at the end of May totaled 1.55 million units, up 6.2% from April, and down 18.8% from one year ago (1.91 million). Unsold inventory sits at a 4.8-month supply at the current sales pace, up from 4.0 months in April and up from the 4.3-month figure recorded in May 2019.