It’s the same ol’, same ol’ this month in the South Florida real estate market.
Once again, a low inventory of listings and an abundance of would-be buyers continues to make it a red-hot sellers’ market.
How will the forecast of increased interest rates change that, if at all? How will the war in Ukraine affect the U.S. real estate market, if at all? And now that America seems to be finally emerging from the Covid-19 shutdowns, will the influx of buyers into our Palm Beach County market continue?
These are questions that we are being asked daily from our clients and friends and while none of us have a crystal ball, we do feel our years of experience will help provide some insight.
Every month, we created a spreadsheet and conduct an analysis of the numbers of our market versus the rest of the state.
For example, our market is unique and usually differs from the reports summarizing the rest of the state and other price points across the nation. If you watch the local news, or follow real estate reports, a one-month inventory of the state lists a median sales price of $350,000. Palm Beach County’s median price, however, was $526,000 in January and our average price was $826,000. The huge differential is due to the number of seven-figure homes for sale which we have in Palm Beach County.
For those new readers to our report, understanding “months of inventory” is crucial. That term means a hypothetical that if no new homes were added for sale, how long would it take for every home for sale to be sold?
The statewide average inventory in January was one month, but in Palm Beach County homes under $999,999 is two months, but for over-$1,000,000 it has increased from December to January from three to five months, which was a needed increase toward a more balanced market.
Our Palm Beach market still attracts many new homeowners seeking our beautiful winter weather and outdoor lifestyle. Thousands more employees are working from home these days, which means they are free to relocate but still hold the same job. Also, thousands more are buying second homes in South Florida. We do not see this slowing down any time soon.
Some say that the market is softening when they see a price reduction in a home.
However, to us that just meant that agents had overpriced the homes to begin with. They were overpriced, even in today’s terms, and sat on the market. If you price your home right however, it will attract a buyers’ frenzy.
So, what does our future hold?
We believe that the upcoming increase in interest rates will have only a moderate impact in our market – mostly with the lower price points. But on $800,000 homes and above, we will continue to see mostly cash transactions. In fact, in January, there was a 30 percent increase in cash transactions from the same time a year ago.
We will have would-be buyers find properties — and emerge as the actual buyer should a bidding-war ensues against others who want the same home. And that is happening now more than ever. Should you want to sell and take advantage of this super-hot market, we also know how to price and market your property effectively to capitalize on all these factors.
We would love the opportunity to discuss your personal situation and what is best for you.