Northern Palm Beaches real estate market is getting complicated

As we hit the middle of April, we will start to see a serious winding down of the real estate market in the Jupiter area. Summer is coming and that's just what happens. Or at least almost always. Covid has changed all the rules, of everything, and the real estate market has been transformed in ways never imagined. It's complicated and there are no easy answers.

What we do know is median single family home prices are up amazing 68% since this virus landed in America. So far in April they are up another $25,000 to a brand-new record high of $850,000. Median condo prices are up 52% since the virus arrived and are up an amazing 9.8% over the past month to another record high of $379,000.

Affordability is a very big issue these days, and you guessed it. It’s complicated. If you are borrowing money for a home, your world has been turned upside down with an average overnight rate on a 30-year fixed mortgage up 79% in a little over a year with almost every sign showing far higher rates heading our direction. Right now, they sit at the highest levels we have seen in well over 11 years. Modern day highs will be erased shortly and how high they climb will be dictated by inflation, which is running at the highest levels we have seen in well over 40 years. It’s complicated.

The working family looking for a house is faced with interest rates sitting at 11-year highs coupled with record high home prices. Many families face real difficult decisions. In Jupiter, so far this year, the median priced unfurnished, annual single family home rent sits at $4,000. That’s up about 43% since Covid came to town.

There is absolutely no doubt that inventory also remains a very big problem, but thankfully we are starting to see some movement to the upside. So far in April, in the Northern Palm Beaches, condo inventory is up 18.6%, townhome inventory is up 8.5%, and single-family home inventory is up 2.7%. Over the last month, overall inventory in the Northern Palm Beaches is up 11.4% and it's the second straight month we have seen buyers having more options. Inventory is now the highest we have seen since November but still down 22.4% when compared to year ago numbers. Sellers are still in control of this market but you can start to feel some changes in the air.

Pending home sales have risen, as buyers have more choices, but the gain over the past month is just 1.8%. So far in April, pending home sales have actually fallen and are still down 37% since last year.

It's the buyer of homes that spend over a million dollars that have driven this market now for over 5 years. Each year, sales above that threshold, set a new record but unless we see a significant change, 2022 will be the first year of decline since 2009. Yes, this year will most likely be the first year we see million-dollar sales fall in 13 years. How do we know that? Well, it is fairly clear that compared to year ago sales, April numbers will be lower than 2021 numbers. It will be the third straight month that has happened. We have not seen a 3-monh consecutive decline in million-dollar sales in almost six years. However, last year's record was so high it's really not a huge factor. Like everything else about this market, it’s very complicated.

I wish I had a crystal ball, but can tell you I think we will see a few more weeks of median home prices climbing in the Northern Palm Beaches. After that, we should see a slowdown that will last at least 7 months. Median prices should pull back, but by how much is the big questions. What happens to the economy on a national, and international level, will be the biggest factor in where we head from here. The Fed looks to be increasing their interest rate by 50 basis points at their next meeting and most signs point to at least 5 more increases planned for this year. It’s not out of the realm of possibility that 30-year rates for a home purchase could exceed 7% or 8% by year end. If inflation keeps roaring, which it certainly could, the result economically across the board, including real estate, could be devastating. How much value the dollar loses during this period is a big concern.

It’s complicated, but no doubt this summer in the Northern Palm Beaches real estate market is going to be one for the books. Stay tuned as Paradise Sharks Real Estate will be with you each step of the way publishing our weekly updates and keep you both educated and informed.

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Fins up…..

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