Palm Beach Posts the Biggest of Florida Real Estate’s Many Market Declines
Palm Beach County posted the biggest second-quarter decline in Florida as one of the hottest real estate markets in the nation continues to simmer down. The Palm Beach Post and the Florida Association of Realtors both state that home sales fell in all 20 major markets of the Sunshine State, with all but two posting double-digit slides compared with a year ago.
In Palm Beach, buyers closed on 2,733 single-family homes in the second quarter, a 36 percent drop from the same period a year ago, when buyers bought 4,293 single-family homes in a flourishing market.
Meanwhile, in the Treasure Coast, sales fell 28 percent in the second quarter of this year, to 1,523 single-family homes from 2,110 in the same period last year.
“There’s a definite cooling off in the market, but I’m not seeing any fire sales. Inventory is up, but that’s misleading because many of those houses will come back off the market if their owners can rent them,” said Chappy Adams, owner of Illustrated Properties.
Despite rising inventory and Florida mortgage costs making it even harder for people to purchase homes, area prices remain basically unchanged from 2005, the peak of the five-year real estate extravaganza.
In fact, the median price of an existing home in both Palm Beach County and the Treasure Coast rose 1 percent over the second quarter of 2005. In Palm Beach, the median price of an existing single-family home rose to $394,100 from $389,500 in the second quarter of 2005, and in the Treasure Coast, the median price rose to $254,500 from $252,400.
In the first quarter of this year, the median price in Palm Beach County was $392,900 and 2,222 homes were sold. In the Treasure Coast, the median was $260,200 with 1,317 sold. Analysts say that with Florida mortgage loan rates up significantly from a year ago, and home prices through the ceiling, the only people buying homes now are those who really need to.
“Flippers are not buying property now, but they are the ones holding a large part of the inventory. Those buying homes today are primarily for their principal residence, and they are offering fair prices, but that’s still in excess of what property sold for last year,” said Jim Sahnger, vice president of Palm Beach Financial Network.
Though smaller in terms of volume, condo sales in Palm Beach plunged even harder than single-family homes, tumbling by 44 percent drop in the second quarter. Prices, on the other hand? They went up a respectable 8 percent, reaching a median of $215,700, up from $199,900.
“Properties have not been on the market long enough to force downward pressure on prices. Unless a seller really, really needs to sell, they will try it out for a while at the list price they were used to over the last six months,” Adams said.
There has been a slight decline in the median price of condos between the first and second quarters of this year, however, with the median drifting down from $220,200 since that point.
In the Florida housing market as a whole, home sales fell 26.7 percent in the second quarter, as reported earlier today. The median price of a home in Florida rose 9 percent. Nationwide, former boom states like ours are feeling declines as previously slow markets enjoy strong growth, according to the National Association of Realtors.
Florida was just one of 28 states and the District of Columbia to report second-quarter sales declines. Nationally, declines averaged 7 percent, with the median price slipping from $227,500 to $219,400. The confidence of the nation’s home builders — a key gauge of the industry from coast to coast — hit a 15-year low this month.
“Total home sales are down compared to last year, inventories are quickly piling up, mortgage credit quality has taken a turn for the worse and home builders remain pessimistic… So far, all indications are that the housing market is slowing in an orderly fashion, but we are still early in the housing slowdown,” an Economy.com analysis read.
In a separate national association report on prices for 151 metropolitan areas, 26 areas had declines and 37 had double-digit increases. Neither West Palm Beach nor the Treasure Coast was included in this report.
When, if ever, will we see price declines in PBC? Don’t look for things to get better anytime soon, although with Florida home mortgage costs receding somewhat, and inventory gradually being absorbed, we’re hopefully looking at a more normal market within the next 6-12 months.
