Way back on July 1st, home inventory in the Northern Palm Beaches had fallen to the lowest numbers we had ever seen. Ever. In history. That was 6 months ago and it has been a straight downhill slide since then, and a rather steep one. In July, already record low inventory numbers dropped another 6%. In August, they dropped another 6%. September down another 9%. October was a good month as inventory only declined 1%, but in November inventory eroded further by 6%. Then comes December and the steepest fall we have ever seen in one month. Buyers have an astounding 14% fewer options than they did just one month ago. Historic. Epic.
Home inventory in the Jupiter area has now fallen for 9 straight months. Over that span, it has fallen 44%. Compared to year ago numbers, the number of options buyers have declined 40%. When looking at traditional supply and demand in the real estate industry, inventory is supply and quite frankly it could not be in worse condition as we kick off the new year.
So, supply is pitiful, but what about demand? If we look any the very top end of the market, homes that sell for over a million dollars, demand has never been stronger. Last year, more homes were sold in this market segment that ever before in the history of the world. They were off the chart, beating the old record set the previous year by 10%. 2019 was a stunning year for million-dollar home sales in the Northern Palm Beaches. But that was before 2020. We didn't quite yet know what stunning truly meant.
Along comes the virus, and no matter what was happening on main streets throughout America, both real estate and the stock markets danced to their own tune in 2020. That stunning year of million-dollar home sales in 2019, you remember the one that blew away the previous record by 10%. Forget about it, as we are still at least a week away from final 2020 numbers and million dollars homes sales are already up over 47% from last year's record. Let that sink in for a minute. Last year's amazing record was left so far back in the dust it's a totally different game being played right now.
Looking ahead, right now there is no slow down at the top end of the market and historically strong seasonal buying is just days away. At this minute, pending home sales above a million dollars are up 218% from where they were a year ago. It’s crazy, it’s bonkers, it’s bananas, but it's what is happening right now at the top end of the Jupiter real estate market.
As pitiful as supply of homes is, and as bananas as demand is at the top end of the market, the real question should be why aren’t prices even higher. Throw in interest rates that were down again this week to within a couple basis points of the all-time record low set just 2 weeks ago. Supply as dreadful as it could be, demand at the top end of the market higher than Willie Nelson, and the cost of borrowing money lower than ever, one would think prices would be climbing faster than they have been.
Don’t get me wrong as median homes prices in the Jupiter area have had a very good year. Single family home prices are up 22% since January 1st and currently sit at an all-time record high of $600,000. Median condo prices have been on a roll that last six months and today sit at $274,000, up 11% over the past 12 months. For the first time in 15 years we are within a whisker of an all time record high. It's frankly surprising we are not there yet.
The real estate market operates efficiently if left alone but it never, like most markets, operates on its own. The past year in America, if you take out Wall Street and real estate it was a dismal year economically. 2020 was a horrific year politically and the physical destruction and hate on the streets was disgusting. The virus is killing more people per day than ever before with a new strain, that may not even be controlled by the current vaccines, just showed up in Florida yesterday. There is no doubt, looking at the numbers that the Northern Palm Beaches real estate market, much like Wall Street, was immune to what was been happening on Main Street. Small businesses and their employees are getting killed. Restaurants, the music industry, the theatre industry, the list goes on and on. The Government has passed over $6 trillion dollars in “relief” that has boosted Wall Street but millions and millions in this country are hurting, some very badly. People aren’t paying rent; landlords aren’t paying their mortgages and one has to believe far more relief will be needed to get this ship back sailing the way it was a year ago.
The macro-economic and political climate will dictate what happens from here. Out debt is crippling, and many believe that we don’t have to worry about what our government spends or does. Interesting times and the real estate market in the Jupiter area is in the middle of it all. It sure looks like if there is no huge negative news that hits us over the next few months that prices should be heading higher, maybe much higher.
Just as easily, we could see the value of the dollar erode, inflation could start taking off even more than we have seen. The political climate, divide and hatred could get even worse. The virus could start killing more people than anyone imagines. What this could do to real estate here in paradise is hard to gauge. The middle-class market, and the million dollar plus market, operate on the same field but the field is divided right now. It’s going to be a very, very interesting year ahead. As I keep saying, we have front row seats to a history lesson nobody would have believed a year ago. It’s not a dream, it's the real deal and for America and our future it is very scary to many.
Paradise Sharks feels higher home prices, fueled by seasonal demand, pitiful inventory and historically cheap money are headed our way. However a roadblock could cause things to change in an instant. If you are contemplating anything real estate, interview brokers, ask a lot of questions and get informed.
Paradise Sharks writes these weekly articles to educate and inform. Our passion is to help our friends and neighbors solve their real estate problems with a high level of customer service and value most of our competition only can dream about. No franchise fees sent off to other states and cities, no broker taking a part of commissions at a closing table. Just a local small business doing what we can to help you solve your problems and save you both time and headaches. Contact us anytime at firstname.lastname@example.org or 561 308-0175 for a complimentary consultation. We would be honored to help.
Fins up and best wishes for a healthy and happy year ahead for you, your family and your friends…….