October 2016 turned out to be a challenging month for the Palm Beach County real estate market. Sluggish sales and low inventory tell the story of a month that came off the first hurricane to threaten our shores in ten years, and lead into a major Presidential election.
Closed sales were the hamper in October 2016 – just 1,311 single-family home transactions closed, down 9% from the year before, and down from 1,475 as reported in the September 2016 market report, an over 10% decrease. Continued pace in this direction would be a bad signal omen for things to come in 2017.
Alas, median closed sales price held it’s ground at $310,000, a solid 9% above October 2015. That number is consistent with what we have been seeing all year – a solid, steady march forward. That’s good for homeowners, but a potential roadblock for first-time homebuyers. Affordability is a term that gets thrown around a lot by our Realtors, and it’s a concern for our many clients who are buying their first single-family home.
Single-family homes in the $200,000-$250,000 took a bit hit in closed transactions for October, indicating that demand from homebuyers continues it’s stranglehold on this price range. Closed sales in the $300,000-$600,000 range actually grew by over 25%. No trepidation, it seems, from those buyers.
And with new listings in that competitive price range off by 20%, these buyers are going to have some tough months ahead. Home sellers are firmly planted in the driver’s seat, so to speak.
Why closed sales and listings are lower for October 2016
It’s hard to attribute this retreat from demand for Palm Beach County single-family homes to any one incident, although October 2016 was a weird month for South Florida. Hurricane Matthew was the first serious storm system to threaten our shores as a massive Category 5 monster, which shut down most of the county for two days. No doubt that many closings were delayed.
The storm spared us, of course, but maybe Matthew left in it’s wake some lingering doubt in the minds of would-be real estate buyers. People perceive the threats that are most apparent. When a storm hasn’t hit for ten years, complacency sets in, and few people other than hurricane meteorologists worry about hurricanes. But now that South Floridians have been jarred awake, it’s possible that many buyers have decided to hold off on their purchasing plans until hurricane seasons ends at the end of November.
We’d also be remiss not to mention the Presidential election, which stirred division and uncertainty across large swaths of the American public. Palm Beach County is not immune. Our County’s voters are overwhelmingly Democratic; it’s possible that being in the throes of Election chaos as we were in the weeks leading up to November 8th, home buying plans were stalled, or altogether scrapped.
What’s next for the Palm Beach County real estate market
There is a good possibility we will see more of the same in the next Palm Beach County Market Report for November 2016. Here’s why: New pending sales are off to the tune of almost 20% for October, which means we should see a near 20% decline in closed home sales next month. That would be both alarming, and historic.
A potential plunge in closed sales could be offset by closings that were delayed in some part by Hurricane Matthew or the Presidential Election. Still, we expect to see at least some continued decline in closed sales.
Will hopeful home sellers replace the closed inventory with new inventory? If October is any indication, the answer is, sadly, no. New listings in Palm Beach County were off by 17% year-over-year in October at 1,714, a decline of about 14% from September 2016. That could shape up to be a real problem for homebuyers who are ready to pull the trigger.
|SINGLE-FAMILY HOME||OCTOBER 2016||OCTOBER 2015||PERCENT CHANGE|
|Median Sales Price||$310,000||$285,000||8.8%|
|Days To Contract||48||47||2.1%|
*Data provided by Realtor’s Association of the Palm Beaches (RAPB)