In another sign that Palm Beach County finally has shaken off its long economic hangover, home prices hit another post-crash high in April.
The median price of a single-family house sold last month was $350,000, the Realtors of the Palm Beaches and Greater Fort Lauderdale said. That’s up slightly from April’s median of $348,000, and a 7% increase from April 2017.
Sales volumes also rose: 1,690 houses were sold by Realtors last month, up 5.8% from April 2017.
Even with the job market improving and consumer confidence returning, Palm Beach County’s housing market hasn’t turned frothy, said Terry Story, a Keller Williams agent in Boca Raton.
“Everything is in alignment for an awesome, off-the-charts market,” Story said. “But I’m not seeing that.”
One headwind comes in the form of rising mortgage rates. Another challenge: The inventory of homes for sale in Palm Beach County fell slightly compared to a year earlier. There’s a five-month supply of houses on the market, Realtors said.
While sellers are seeking ever-more-ambitious prices, buyers are struggling with the combination of tight inventories and home values that are increasing more quickly than their paychecks.
“There’s still a lack of listings,” said Kim Price, a Realtor at Jupiter Lighthouse Realty and president-elect of the Jupiter-Tequesta-Hobe Sound Board of the Miami Realtors. “Inventory is still an issue.”
There were 7,233 houses for sale in April, a 3% decline from a year ago.
Meanwhile, mortgage rates have begun their long-anticipated rise, reaching 4.66%. The average rate on a 30-year loan reached its highest level since 2011, mortgage giant Freddie Mac said.
“That’s what’s pushing people to get out there and buy now,” said Jackie Ellis, a Keller Williams broker in Boynton Beach.
Rising rates make it harder for buyers to qualify for loans, but today’s rates pale in comparison to the double-digit mortgage rates of the 1980s, Ellis and Price said.
“To me, mortgage rates are still hovering at historical lows,” Price said. “They have inched up, and when they inch up, that does affect purchasing power.”
For Palm Beach County buyers, the rising costs of homeowners insurance and flood insurance are more dramatic than the increase in mortgage rates, Price said.
Houses priced at $150,000 to $250,000 occupied the hottest spot in Palm Beach County’s housing market in April. Properties in that price range found a buyer in a median of just 32 days.
“If it’s below the median price, you’re getting multiple offers,” Story said.
Competition is fierce at any price below $350,000, Ellis said — a reality that can be jarring to first-time buyers who want to take their time before deciding on a major purchase.
“If you see one you like, there’s no going home and talking about,” Ellis said. “You’ve got to jump on it.”
By contrast, mansions priced at $1 million or more needed 168 days to go to contract.
Trends were similar in the condo and townhouse market. The typical Palm Beach County condo that sold in April fetched $181,750, up 10.2% from a year ago. The number of sales jumped 9.7% from a year ago.
In Palm Beach County and nationally, home prices are being spurred upward by the combination of a strong job market, rising wages, a lack of new construction and an influx of millennials who finally are moving out of apartments and into houses.
“The first-time buyers are out there, and that’s where it all starts,” Ellis said.
The main challenge for first-time buyers is stiff competition for inventory, she said. Lending standards, long a bane of buyers, have eased in recent years.
“I don’t know that there are that many obstacles,” Ellis said. “You don’t need a big down payment.”
Real estate website Zillow said Thursday that U.S. home values are rising at their fastest pace in 12 years. Over the past year, home values nationally jumped 8.7% to a median of $215,600.
Home values haven’t appreciated so quickly since June 2006, right before the housing bubble burst. Then, values were climbing at a 9% pace.
“Home values are rising faster than we’ve seen in a very long time,” Zillow senior economist Aaron Terrazas said. “The spring home shopping season has been a perfect storm of strong demand and tight supply.”
Palm Beach County home prices still remain well below record levels. During the housing bubble, the county’s median resale price peaked at $421,500 in November 2005 (a sum that adjusted for inflation equates to $534,439 in today’s dollars). Within a few years, the median price had crashed to less than $200,000.
Palm Beach County’s job market, which is closely tied to the housing market, went through boom and bust during the housing bubble and the Great Recession. The county’s unemployment rate fell as low as 3.2% in the spring of 2006, then soared to a peak of 12% in the summer of 2010.
Palm Beach County’s labor market has shown mixed results in recent years. While the county’s unemployment rate fell to 3.3% in April, a 12-year low, job growth has been tepid. The number of jobs grew just 0.9% from April 2017 to April 2018, according to state economists.
However, wage growth finally is showing signs of life. In a first for Palm Beach County’s labor market, the average weekly wage topped $1,100 in the fourth quarter of 2017.
Tribune Content Agency