December is the perfect month to take a break, rest, and relax, and that holds true for home buyers who are driving the single-family home market in Palm Beach County. The holidays slow things down, and real estate transactions typically see some modest decline in closed sales.
For December 2017, that happened, with Closed Sales logging a -1.8% dip. That’s OK; on the whole, 2017 turned out to be a predictable market with a few surprises sprinkled in.
On the “predictable” side of things, we knew that the balance between buyers and sellers would continue to be out of whack. There are now approximately 1 additional buyer for every 11 sellers in the market. That’s not a whole lot of slack, but it’s certainly enough to drive overall median prices up, and more importantly, when all of those buyers are consolidated into one common price range, you feel the pressure.
Current Listing Inventory ended the year at about 4.8 months, meaning that the active “stock” of single-family homes on the market would take about 4.8 months to liquify. A balanced market between buyers and sellers is considered by economists to be 5.5 months, with anything under 5.5 months a “seller’s market”.
Now, here’s where we make some connections. Median Home Price for the month of December 2017 was $341,500, a bump of +8.4% over this time last year. And the annualized Median Home Price for the full year is up +7.2%.
For single-family homes sold in the price range of $300,000 – $399,000, we saw a +5% increase in the number of homes sold over 2016. Further, homes in that price range consistently ranked for the most transactions closed each month of 2017, including December, during which that number was 335. All other price ranges below that experienced negative growth.
So if there are more buyers in the market than sellers, and the first break for positive appreciation of closed transactions happens for homes in the $300,000-$399,000 price range, what are these numbers telling us?
The answer is as simple as it seems: if you want a shot at closing on a home in 2018, you need to be considering homes over $300,000, and more likely, homes near the $340,000 mark.
What to consider if you are buying or selling a home in 2018
Here’s what you need to know going into 2018:
- Be prepared for the most competitive demand in the $300,000-$399,000 price range of single-family homes
- Be prepared to wait at least 55 days to close on your home sale or purchase, and possibly as long as 99 days
- Be prepared to sell or buy at about 95% of the list price for the home
Here are some other things to keep in mind.
First, Current Inventory is likely to continue to be tight. We ended December 2017 negative four points below the level of inventory we had in the market in December 2016. If buyers entering the market continue to outpace willing sellers, that trend is going to intensify, putting upward pressure on median home prices.
Next, we are likely to see higher Overall Dollar Value. This past year was an active one for buyers and sellers, with $8.7 billion trading hands (remember, this report does not include commercial, land, townhome, or condo transactions). Part of the reason for increased overall dollar value is an increase in median home prices. Another less obvious reason: people are moving to Palm Beach County, and that migration is going to continue for the next few years.
A report from the U.S. Census Bureau in 2017 showed that three of the nation’s top ten metropolitan population gainers, by both migration and birth, were in Florida. South Florida was number seven on that list. In 2016, the report showed, South Florida added 65,000 more people, bringing the total population to around 6 million.
Palm Beach County added about 22,000 people in 2016, bringing the total population for our county to about 1.4 million (source).
Don’t expect that trend to suddenly reverse in 2018.
In sum, it will be an active market in 2018, and challenges for home buyers and sellers definitely lie ahead. But if you work with intelligent, experienced Realtors who are “in the know” like ours, you’re going to do just fine!
December 2017 Single-Family Real Estate Market Stats
|SINGLE-FAMILY HOMES||DEC 2017||DEC 2016||PERCENT CHANGE|
|Median Sales Price||$341,500||$315,000||8.4%|
|New Pending Sales||1,271||1,259||1%|
*Source: RAPB Single-Family Home Market Report