MIAMI — Palm Beach County single-family luxury home sales rose for the third consecutive month in October 2022 as total inventory increased for the fourth straight month, according to the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.
“Palm Beach County luxury market continues to surge, buoyed by high migration from individuals and companies from high-tax, high-density states,” JTHS-MIAMI President Brad Westover said.
Palm Beach County Single-Family Luxury Home Sales Increase Again
Palm Beach County single-family luxury homes, priced at $1-million-and-above, increased 2.9% year-over-year to 210 transactions in October 2022. The jump corresponds to a 32.1% jump in new listings by initial listing price at that price range.
As far total sales compared to a record October 2021, Palm Beach County October 2022 transactions decreased 31.4% year-over-year, from 2,809 to 1,927, because of rising mortgage rates and low inventory.
Palm Beach single-family home sales decreased 28.7%, from 1,471 to 1,049. Palm Beach condo transactions declined 34.4%, from 1,338 to 878.
The Fed, which voted for another Fed Funds rate increase in September, is intent on slowing 40-year high inflation. While the Fed doesn’t set mortgage rates, it affects them through its conduct of monetary policy. As a result, the 30-year fixed mortgage rate has fluctuated from 3.1% to 6.61% in the last 52 weeks, an unprecedented range of volatility.
The average 30-year fixed rate mortgage rate fell sharply to 6.61% for the week of November 17, the largest weekly drop in 41 years. This week’s sharp drop came on the heels of October data on consumer and producer prices that showed inflation has peaked.
“Mortgage rates are likely to stay below 7% for the rest of 2022 and to stay below 7.5% in 2023,” MIAMI REALTORS® Chief Economist Gay Cororaton said. “The plateauing of interest rate increases in 2023 should breathe life into the housing market and as buyers adjust their expectation to the ‘new’ normal of a 7%. Housing and commercial real estate conditions remain favorable in the South Florida market due to relatively affordable home prices and a business-friendly environment.”
South Florida Real Estate’s Strong Market Fundamentals
- Global companies continue relocating to South Florida, such as Citadel, a multinational hedge fund that manages $57 billion in assets and is developing a $1 billion Miami office tower with plans to have 1,500 employees in 10 years.
- Demand from homebuyers from high-tax, high-density states remain high as Florida driver license swaps are up double digits for relocating Californians and New Yorkers.
- The Miami-Fort Lauderdale-West Palm Beach metro area has the 6th-lowest unemployment rate (2.3%) in the nation. This is lower than the unemployment rate of 2.5% in Florida and 3.5% rate nationally.
- Palm Beach prices keep rising and homes keep selling fast (27 days on average).
- Global buyers, who because of pandemic protocols haven’t been able to purchase as they are accustomed to in recent years, are returning in mass to the No. 1 destination for global homebuyers. This month, Miami was ranked as the 1 destination in the world for foreign investment by Financial Times.
- Palm Beach’s percentage of cash buyers (48.6%) is more than double the national figure.
- Distressed sales are statistically insignificant, reflecting a healthy market.
- Demographic shifts (Millennials reaching prime home-buying age and surging senior/retiree population growth)
- High percentage of workforce working remotely favors the Miami market, where many have relocated to live, work and play because of our lifestyle, weather and more.
South Florida: A Bargain in Comparison to Other Global Cities & U.S. Metros
The South Florida market remains more affordable compared to other major metropolises, and this has tended to attract businesses to the South Florida market. The median single-family home price was lower in Palm Beach County ($570,000) compared to major markets like San Francisco ($1.3 million), Los Angeles ($893,200), New York -Jersey City ($627,400), Boston ($608,900), Denver ($666,600) and Washington DC ($581,300).
Miami-Fort Lauderdale-West Palm Beach’s price per square meter is $3,170, far below at least 30 global cities and 13+ U.S. Metros including markets such as Hong Kong ($28,570), New York City ($17,191), San Francisco-Oakland-Hayward, CA ($8,250), Madrid, Spain ($6,173), Los Angeles-Long Beach-Glendale, CA ($4,740) and Seattle-Tacoma-Bellevue, WA ($4,460), according to National Association of REALTORS Profile of International Transactions in U.S. Residential Real Estate 2022.
Palm Beach County single-family home median prices increased 14% year-over-year in October 2022, increasing from $500,000 to $570,000. Existing condo median prices increased 22.4% year-over-year, from $237,000 to $290,000.
While median prices have increased nationally so has house-buying power because of a long-run decline in rates before March 2022 and the slow, but steady growth of household income. West Palm Beach (No. 5) and Miami (No. 6) ranked among the Top-10 U.S. metros where homebuyer income grew the most during the pandemic via Redfin report.
Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Inventory for Palm Beach single-family homes (3.2 months) and condos (2.5 months) are low. Also, one of the supports for home prices is rents and rents are rising strongly.
Locally, the greater share of South Florida luxury sales is also part of the reason for the large year-over-year increase in median prices.
Palm Beach Total Active Listings Increase for Fourth Consecutive Month
Total active listings at the end of October 2022 increased 78% year-over-year, from 4,129 to 7,351.
Inventory of single-family homes increased 93.8% year-over-year in October 2022 from 2,212 active listings last year to 4,286 last month. Condominium inventory increased 59.9% year-over-year to 3,065 from 1,917 listings during the same period in 2021.
New listings of Palm Beach single-family homes decreased 6.9% to 1,577 from 1,694. New listings of condominiums decreased 12.3%, from 1,509 to 1,323.
Months’ supply of inventory for single-family homes increased 146.2% to 3.2 months year-over-year, which indicates a seller’s market. Inventory for existing condominiums increased 92.3% to 2.5 months, which also indicates a seller’s market. A balanced market between buyers and sellers offers between six- and nine-months supply.
Nationally, total housing inventory at the end of October was 1.22 million units, which was down 0.8% from both September and one year ago (1.23 million). Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 3.1 months in September and 2.4 months in October 2021.
Palm Beach Real Estate Posts $216.8 Million Local Economic Impact in October 2022
Every time a home is sold it impacts the economy: income generated from real estate industries (commissions, fees and moving expenses), expenditures related to home purchase (furniture and remodeling expenses), multiplier of housing related expenditures (income earned as a result of a home sale is re-circulated into the economy) and new construction (additional home sales induce added home production).
The total economic impact of a typical Florida home sale is $112,500, according to NAR. Palm Beach County sold 1,927 homes in October 2022 and had a local economic impact of $216.8 million.
Palm Beach total dollar volume totaled $1.3 billion in October 2022. Single-family home dollar volume decreased 17.74% year-over-year, from $1.1 billion to $973 million. Condo dollar volume decreased 26.17% year-over-year, from $471 million to $347 million.
Palm Beach Distressed Sales Remain Low, Reflecting Healthy Market
Total Palm Beach distressed sales decreased 34.6% in October 2022, from 26 to 17. Short sales and REOs accounted for 0.2% and 0.7% year-over-year, respectively, of total Palm Beach sales in October 2022. Short sale transactions decreased 57.1% year-over-year while REOs decreased 26.3%.
Only 0.9% of all closed residential sales in Palm Beach were distressed last month, including REO (bank-owned properties) and short sales, compared to 0.9% in October 2021.
Palm Beach’s percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented approximately 1% of sales in October, identical to October 2021.
Palm Beach’s Percentage of Sales Continue to Outpace the Nation, State
In Florida, closed sales of single-family homes statewide totaled 20,837 in October 2022, down 24.6% year-over-year, while existing condo-townhouse sales totaled 8,356, down 26.9%. Closed sales may occur from 30- to 90-plus days after sales contracts are written.
Nationally, total existing-home sales transactions decreased 5.9% from September to a seasonally adjusted annual rate of 4.43 million in October. Year-over-year, sales dropped by 28.4% (down from 6.19 million in October 2021).
The statewide median sales price for single-family existing homes was $401,990, up 12% 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 $310,000, up 19.2% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.
Nationally, the median existing-home price for all housing types in October was $379,100, a gain of 6.6% from October 2021 ($355,700), as prices rose in all regions. This marks 128 consecutive months of year-over-year increases, the longest-running streak on record.
Palm Beach Real Estate Attracting Multiple Bids, Buyers Going Over-List Price
The median percent of original list price received for single-family homes was 95.3% in October 2022, down 3.4% from 98.7% last year. The median percent of original list price received for existing condominiums was 96.1%, down 2.1% from 98.5% last year.
The median number of days between listing and contract dates for Palm Beach single-family home sales was 28 days, up from 14 days last year. The median time to sale for single-family homes was 71 days, a 20.3% increase from 59 days last year.
The median number of days between the listing date and contract date for condos was 27 days, up from 15 from last year. The median number of days to sale for condos was 69 days, a 23.2% increase from 56 days.
Palm Beach Cash Sales Nearly Double National Figure in October 2022
Cash sales represented 48.6% of Palm Beach closed sales in October 2022, compared to 48.2% in October 2021. About 26% of U.S. home sales are made in cash, according to the latest NAR statistics.
Cash buyers are not deterred by rising rates. The high percentage of cash buyers reflects South Florida’s top position as the preeminent American real estate market for foreign buyers, who tend to purchase with all cash as well as some moving from more expensive U.S. markets who can buy more with their profits from real estate sales.
Cash sales accounted for 57.9% of all Palm Beach existing condo sales and 40.8% of single-family transactions.
To access October 2022 Palm Beach Statistical Reports, visit http://www.SFMarketIntel.com
Note: Statistics in this news release may vary depending on reporting dates. MIAMI reports exact statistics directly from its MLS system.
About the MIAMI Association of Realtors®
The MIAMI Association of Realtors (MIAMI) was chartered by the National Association of Realtors in 1920 and is celebrating 102 years of service to Realtors, the buying and selling public, and the communities in South Florida. Comprised of six organizations: MIAMI RESIDENTIAL, MIAMI COMMERCIAL; BROWARD-MIAMI, a division of MIAMI Realtors; JTHS-MIAMI, a division of MIAMI Realtors in the Jupiter-Tequesta-Hobe Sound area; MIAMI YPN, our Young Professionals Network Council; and the award-winning MIAMI Global Council. MIAMI REALTORS represents nearly 60,000 total real estate professionals in all aspects of real estate sales, marketing, and brokerage. It is the largest local Realtor association in the U.S. and has official partnerships with 242 international organizations worldwide. MIAMI REALTORS® has launched its new YPN Global and will host the first-ever YPN Global Congress on Feb. 12-15, 2023, in Dubai. MIAMI has been selected to host the prestigious FIABCI World Congress on June 5-9, 2023. MIAMI’s official website is www.MiamiRealtors.com