Sales Down As Days to Contract Jump

Hello Everyone and thank you for watching. This is Gia with Palm Beach Premier Real Estate here in Boca Raton Florida with your 2-minutelocal market report for JUNE 2019.

Subject This Month: Sales Fall asMedian Days to get a Contract Increase Significantly

So here’s a quick take on the numbers that came out from the Realtors Association of the Palm Beaches

The message from your team here at Palm Beach Premier Real Estate this month is: Sales Down asDays on Market and Days to Secure A Contract Jump Higher .

So let’s take a closer look at the local internal real estate market numbers…. What we’re seeing is the following:

  1. The median sales price of a single family home in Palm Beach Countywas $357,000 …..down from last month….and about the same levels as a year ago.
  2. The number of housing units soldwas down sharply from last month and significantly from one year ago.
  3. The inventory of homes for sale in Palm Beach County has leveled off.
  4. Trends were a little different in the condo and townhouse market. The typical Palm Beach County condo that sold in June fetched $190,000 identical to a year ago
  5. Luxury homes are continuing to take significantly longer to sell.
  6. 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.

So what does that mean for Sellers? – Great question – it highlights JUST HOW IMPORTANT it is to price your properties competitively – and by that what I mean is very close to what has sold most recently. 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.

So clearly (and as we mentioned last month) the housing market is facing some headwinds and some significant downward pressure in the marketplace:

Once again we want you to consider these 3 important factors:

  1. 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
  2. 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% - less qualified people equals less buyers
  3. 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 [NOT SUSTAINABLE] .... 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.

And 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….
Going forward we will definitely be keeping a continued close watch on prices, interest rates, inventory levels and the number of closed sales.

If you’ve been considering buying or selling - 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!

As always we look forward to speaking with you. Thank you again for watching. We’ll see you next time…. J