Palm Beach Home Prices Decline; Future of Area Housing Market Questioned

Florida home loans! Get your Florida home loans here!

This might as well be the motto for the Palm Beach housing market, as incentive are being thrown as potential buyers left and right, with the hope that this will boost sales and growth in the region.

However, if prices continue to drop, luring in Florida home loan applicants won’t be a problem for sellers; turning a profit will be. According to Regional Multiple Listing Service records compiled monthly for the National Association of Realtors, the median price of all single-family homes in Palm Beach County sold in June was $378,267, down slightly from June 2005’s median price of $379,500.

Home sales decline … again

Palm Beach County has experienced affordable housing problems; hence, the decline of home sales in June. Based on the MLS report, this figure plunged 39 percent compared with June 2005: to 947 from 1,551. It makes mark the seventh straight month of significantly declining sales.

The MLS’ new-listings report for June also gives a vivid snapshot of the local Florida real estate market - and just how unaffordable it is. Of 3,495 new listings in Palm Beach County last month, nearly 80 percent had asking prices of $300,000 or more. Nearly a third had price tags topping $500,000. Ouch. These values make it almost impossible for the typical borrower to take out a Florida home loan in the area.

Five stages of local Florida home loan activity?

Thomas Lawler, a Virginia-based housing consultant, makes a morbid metaphor. He claims the South Florida real estate market has entered what the first of the well-known five stages of grief.

1. “Denial in a previously hot real estate market occurs when a home listed at a high price doesn’t sell quickly, even though just a few months ago houses sold in just a few weeks,” Lawler says in his July 19 Lawler Economic & Housing Consulting newsletter. “The [seller] says, ‘This is weird, but I’m sure it’s just a glitch,’ and does not alter his or her asking price.

2. “Anger occurs when, after a few months pass, the house still hasn’t sold, and little interest has been shown,” he continues.

3. “Bargaining begins as the home seller starts to offer a few incentives, agrees to more open houses, starts to fix up the house to make it show better, and actually agrees to lower the listing price a bit.

4. “Depression starts to set in when the house has been on the market for about four months or so, and the seller realizes that his or her net worth simply isn’t going to be as high as he or she thought.

5. “Finally, acceptance occurs when the seller realizes that homes prices have fallen; that he or she will not get peak price of what is now six months or more ago; and that if he or she wants to sell the home, the asking price needs to be adjusted downward considerably.” This would appeal to those waiting on more affordable Florida home loans at least.

Is this view extreme? Perhaps. Other experts acknowledge the Palm Beach market is down slightly - but they predict an easy, soft landing. Certainly no reason to grieve significantly.