The price for a typical house rose 3.3 percent, but the number of sales fell 6.2 percent despite record-low unemployment, record-high stock prices and rock-bottom mortgage rates.
Palm Beach County home prices continued their trend of modest appreciation in October, and sales volumes dipped despite a robust economy.
The typical house sold by an agent traded for $359,000 last month, according to the Broward, Palm Beaches and St. Lucie Realtors. That was up 3.3 percent from a year ago but down a bit from the pricing levels of May and June.
Debbie Smith, broker at ERA Home Run Real Estate in suburban Lake Worth, called the 3 percent annual increase a healthy level of appreciation.
“You don’t want to see 20, 30, 40 percent increases,” Smith said.
However, home sales fell to 1,369, down 6.2 percent from October 2018, Realtors said. The decline comes in spite of record-low unemployment, record-high stock prices and rock-bottom mortgage rates, three economic factors that typically drive demand for homes.
Even with modest levels of appreciation, some middle-class buyers are being squeezed out of Palm Beach County’s property market. Smith said she recently worked with two clients who decided to buy in Port St. Lucie because they could get houses for less than $300,000. St. Lucie County’s median price was $237,000 in October.
“Both of those buyers went there because Palm Beach County was just a little too high for them,” Smith said.
In a separate study released Thursday, real estate data firm Zillow said the median home in Palm Beach County is worth $283,300, up 3.1 percent over the past year.
That was the slowest rate of growth since December 2012, just as Florida finally was emerging from the Great Recession, Zillow said.
Even with a strong jobs picture, affordability can pose a challenge for buyers, said Zillow economist Jeff Tucker.
“You may have a job, but if you don’t make enough to cover the mortgage, that doesn’t really help,” Tucker said.
Meanwhile, homeowners are staying in their homes for 10 years or longer, another factor squeezing the supply of homes. While housing experts generally expected baby boomers to downsize and sell their abodes to millennials, things haven’t worked out that way.
“You’ve got two big generations wanting to own homes at the same time,” Tucker said. “It is not at all a perfectly timed hand-off of the baton.”
The housing market in Palm Beach County and nationally remains something of a conundrum. The job market is booming, and mortgage rates have plunged over the past year.
Nationally, home sales rose 1.9 percent from October 2018, while the median sales price jumped 6.2 percent, the National Association of Realtors said Thursday.
“Historically low interest rates, continuing job expansion, higher weekly earnings and low mortgage rates are undoubtedly contributing to these higher numbers,” said Lawrence Yun, chief economist at the National Association of Realtors.
Mortgage rates remain at rock-bottom levels. The average 30-year fixed-rate mortgage cost 3.66 percent as of Thursday, mortgage giant Freddie Mac said.
Borrow $300,000 at 3.66 percent, and the monthly payment is $1,374. Taking a loan for the same sum at last fall’s rate of 4.81 percent meant a monthly payment of $1,576.
Meanwhile, the U.S. economy has been expanding for more than a decade, and the stock market remains near record highs.
All those tailwinds typically combine to create a booming real estate market. Instead, the housing market hasn’t rebounded strongly.
In one example of confusing signals, the median price of Palm Beach County condos and townhouses sold by Realtors fell 7 percent from a year earlier, to $172,000, while the number of sales fell nearly 3 percent from October 2018.
Most condo sales in Palm Beach County close without loans, so mortgage rates are a minor factor in that market. However, loan programs run by the Federal Housing Administration and the Veterans Administration are beginning to allow borrowers to buy condos, a shift that might open those units to first-time buyers, Smith said.
Palm Beach County home prices remain well below their record highs. In November 2005, the median house price hit an all-time high of $421,500.