Sales Fall as Median Days to get a Contract Increase Significantly
Let’s take a closer look at the local internal real estate market numbers. What we’re seeing is the following:
- The median sales price of a single family home in Palm Beach County was $357,000, down from last month and about the same levels as a year ago.
- The number of housing units sold was down sharply from last month and down significantly from one year ago.
- The inventory of homes for sale in Palm Beach County has leveled off.
- Trends were a little different in the condo and townhouse market. The typical Palm Beach County condo that sold in June fetched $190,000, which is identical to a year ago.
- Luxury homes are continuing to take significantly longer to sell.
- The amount of time it took to get a contract jumped another 16% versus last year for single family homes with properties now taking closer to 60 days to get a contract.
What does this mean for sellers?
These stats highlight how important it is to price your properties competitively, meaning price close to what has sold most recently, without looking too far back in time when the market conditions were different. In this marketplace that we are in right now, as we transition to that buyer's market, it really is a beauty contest and a price war (along with having great marketing as well)!
Clearly the housing market continues to face some headwinds and some significant downward pressure in the marketplace.
Once again, it is important to consider these 3 important factors:
- We have definitely Reached the Top of Real Estate Cycle - 2008-2018. Note: Each RE Cycle is 7-10 years, so it makes sense that we are starting our downward leg.
- We’ve reached the Top of Debt Cycle. 4 interest rate increases in 2018 (9 in all by the FEDERAL RESERVE) have now created headwinds with consumers highly leveraged. Note: Every 1% increase to the mortgage rate impacts buying power by 10%, meaning less qualified people equals less buyers.
- Buyers have Price Fatigue. Property Values have increased more than 40%+ since 2008 and yet wages have simply not kept pace, perhaps 10%. So something has to give, either people get paid more or prices have to come down....Which do you think is more likely?
Looking Ahead For the Rest of 2019 As It Relates to Housing
We can certainly extrapolate some themes here:
First - The average household’s cost to service debt has reached a point at which it will become more difficult and challenging to find buyers who can qualify for a conventional mortgage (FNM, FRE, FHA).
Second - Housing affordability issues will continue to be a theme going forward.
Third – Inventory will continue to Increase, prices will soften and properties will likely sit on the market for extended periods of time.
Fourth – The effects of the worldwide economic slowdown will be felt here in the USA throughout 2019 and into 2020 and will have a knock-on impact for the housing market.
Finally - It’s very surprising that the nationwide media and industry experts haven’t focused on the economic data that shows that on a national level that existing home sales have fallen for 17 months in a row.
Furthermore, the Federal Reserve is now leaning towards cuts to the Fed Funds Rate and we will know specifically what their proposed medicine is likely to be in just a matter of days. Keep in mind that interest rate pauses and cuts are a sign of economic weakness not growth.
Here is a quick video going into more depth of current economic indicators:
Going forward we will definitely be keeping a continued close watch on prices, interest rates, inventory levels and the number of closed sales.
Please give us a call for a confidential consultation at 561.395.8418 or email us at Info@PBPrealestate.com - we’re here to help!