One reason we hear that is causing the decline in sales is limited inventory. As of today, inventory levels are down for 5 straight months and the smart money says these declines will continue for another couple months. We have not seen available inventory this low since October. However, the number of homes on the market is almost exactly where we were last year.
If inventory levels are the same as a year ago and pending home sales are 12% lower then you cannot entirely blame inventory for the lack of sales. Paradise Sharks is marketing a condo beachside in Jupiter that is priced $20,000 below the median sales price over the past year. Our list price is lower than 87% of all sales in the community over the past 2 years. Median condo prices in the Jupiter area are up about 14% over the past two years. It isn’t moving and it’s not because of inventory.
Median homes prices in the Jupiter area have been moving higher all year but we are starting to see them pull back slightly. Once again, the summer slow down doesn’t help. Interest rates are up about a half a point since January but fell again last week for the 4th straight week. Remember when the Fed raised interest rates again back on June 13th. Since then the average overnight rate of a 30 year conforming loan is down 10 basis points. Buyers should be rejoicing and writing contracts, but they aren’t.
Those who regularly read Paradise Sharks weekly updates know we closely follow sales of properties that sell for over a million dollars. The reason is simple. They are a leading indicator of where the overall real estate market is headed. Last year the number of these sales set a new record. We had been way ahead of last years record pace but both May and June saw lower sales of these luxury homes than in 2017. We still remain 6% above last year’s numbers but we had been much higher. On May 1st, we were 20% above 2017 numbers but over the past couple months we have given back a lot of those gains. Inventory is not an issue here, as properties with list prices over a million dollars inventory levels are well above 12 months.
No clear signal where this market is headed, There is no doubt in many neighborhoods there is a true lack of homes in excellent condition. Keep a close eye on luxury sales. If you listen to the Fed, interest rates will continue to rise. A significant move higher could have a serious effect on real estate prices.
One thing is certain. If you are doing anything real estate, you need to be working with a broker who has your best interests as their main focus. Interview at least 3 brokers and ask a lot of questions. Make sure you are making educated decisions. If you are doing real estate anywhere in Palm Beach or Martin County, Paradise Sharks would love the opportunity to earn your trust and your business. We love to interview and you can set yours up today at firstname.lastname@example.org or 561.308.0175.