OK I admit it. Last week when the Dow Jones Industrials were down over 1,100 points a few short minutes after the market opened my thoughts raced to 2008. If anyone tells you the stock market and the real estate market are not related in any way, they are. And in an area like the Northern Palm Beaches it is a big, significant way. A huge portion of the homes and condominiums here in the Palm Beach Gardens area are second homes, third homes, investment properties. Consumer confidence is closely tied to the stock market and volatility is not good if one’s goals includes climbing real estate prices.
We are just weeks away from kicking off what is shaping up to be another record breaking “season” here in paradise. Try finding a seasonal rental near the beach here in Jupiter. It’s not easy and it’s going to cost you a lot of money. More than last year. Summer traffic in our favorite restaurants was solid. Just the other day we were talking about the good old days when summer specials were everywhere. Not this year.
If you are hoping for real estate prices to move higher the market is perfectly positioned. As of this morning, Palm Beach Gardens home inventory levels, and those in the nearby communities have dropped again. For the 7th straight month. These are significant numbers we are talking about. Big numbers. Down 3.7% over the past 2 weeks in the Northern Palm Beaches. Down 4.1% over the past month. Down 19% from year ago numbers. Down 24% since this slide began back in February. Buyers have few options and when good opportunities hit the market they go quickly. Buyers not properly positioned to write contracts on the right house in the right location will be left in the dust.
The good news for buyers, besides the potential for more stock market volatility ahead, is the summertime blues. Pending home sales are down. As of today they are down 7% over the past 30 days. However, they are a full 15% above last year at this time when buyers had much more to choose from. But time for buyers to land good deals may be short. The summertime blues will move into early fall but once the snowbirds flock back watch out.
It is getting interesting and anybody who cares about the effect real estate prices, and stock prices, have on their overall financial situation needs to watch closely. Very closely. We are expecting strong demand from our seasonal visitors and with inventory levels this low explosive moves in prices could be headed our way. But watch the stock market volatility, interest rates that caused some of the volatility, as hurdles that may get in the way. Keep informed and be careful.