Palm Bay Housing Market Report – September 2023
Mid-Market Condo Sales Surge in Palm Beach County
The Palm Beach County mid-market condo segment, priced between $400,000 to $600,000, experienced a notable rise of 9% year-over-year in September 2023, reaching 145 transactions. This surge is revealed in the statistics released by the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.
Increasing Demand Amidst High Demand, Low Supply
Palm Beach County remains in a high-demand, low-supply housing market. Showing appointments in South Florida increased by 2.6% year-over-year, reaching 193,711 in September 2023. However, total home sales in Palm Beach County decreased by 3.8% year-over-year, attributed to elevated mortgage rates and a lack of supply in specific price points.
Impact of Rising Mortgage Rates
The housing market is adjusting to the impact of rising mortgage rates. The 30-year fixed-rate mortgage averaged 7.57% as of October 12, up from 7.49% the previous week and 6.92% one year ago. This adjustment is leading to a bifurcated growth, with homes priced over $600,000 surging, driven by cash and equity-rich buyers.
Inventory Dynamics and Market Trends
Palm Beach County’s existing inventory is down by 34.5% from pre-pandemic levels, with single-family home inventory decreasing by 5.3% and condominium inventory increasing by 34.1% year-over-year in September 2023. The months’ supply of inventory for single-family homes is 3.3 months, indicating a seller’s market, while existing condominiums have a 3.8-month supply.
Price Appreciation and Wealth Migration
Median prices for single-family homes and existing condos in Palm Beach County have increased year-over-year by 3.4% and 6.9%, respectively, in September 2023. This rise is attributed to wealth migration, boosting South Florida’s household income by $16 billion in 2021. New households moving into Palm Beach County had an average adjusted gross income of $242,200.
Economic Impact and Dollar Volume
Every home sale in Palm Beach County contributes to the economy. In September 2023, the local economic impact of home sales reached $247 million, with total dollar volume hitting $1.4 billion. Single-family home dollar volume increased by 3.7% year-over-year, reaching $1.04 billion, and condo dollar volume increased by 16.12% to $430 million.
Healthy Market Conditions
Distressed sales in Palm Beach County remain low, constituting only 0.7% of all closed residential sales in September 2023. The percentage of distressed sales is on par with the national figure, which stands at 1%. Palm Beach County’s median price appreciation is outperforming both the national and state levels.
Market Dynamics and Cash Sales
The median percent of original list price received for single-family homes and existing condominiums was 96.2% and 95.2%, respectively, in September 2023. The median number of days to sale and between listing and contract dates varied for single-family homes and condos. Cash sales represented 51.4% of Palm Beach closed sales in September 2023, indicating sustained interest from foreign buyers and those moving from more expensive U.S. markets.
Palm Bay Housing Market Forecast 2023 & 2024
The average home value in Palm Bay stands at $313,651, reflecting a 2.1% decrease over the past year. Homes in Palm Bay typically go pending in approximately 21 days, indicating a dynamic and fast-paced market. As of September 30, 2023, the median sale-to-list ratio is 0.992, with 20.3% of sales occurring over the list price and 52.9% under the list price. The median days to pending is 21.
Palm Bay MSA Housing Market Forecast
According to the housing market forecast provided by Zillow, the Palm Bay Metropolitan Statistical Area (MSA) is expected to see positive growth. As of September 30, 2023, the forecast predicts a 0.2% increase in home values by October 31, 2023, followed by a 0.3% increase by December 31, 2023. Looking ahead to September 30, 2024, a more substantial increase of 3.1% is anticipated. This forecast suggests a positive trend in the Palm Bay housing market over the coming months, offering potential opportunities for both buyers and sellers.
The Palm Bay Metropolitan Statistical Area includes counties within Florida, contributing to the overall size and diversity of its housing market. These counties play a vital role in shaping the MSA’s real estate landscape, economic activities, and overall growth. A thorough understanding of the specific counties within the Palm Bay MSA provides valuable insights for investors, homebuyers, and industry professionals navigating this dynamic housing market.
Investing in Palm Beach Real Estate Market
1. Population Growth and Trends
Investors eyeing the Palm Beach real estate market can find promise in the city’s population growth and trends. The region has experienced sustained population growth, driven in part by in-migration from states like New York, California, and New Jersey. This influx of residents contributes to a robust and expanding housing market, offering a potentially lucrative landscape for real estate investors.
2. Economy and Job Opportunities
The city’s economy and job market are critical factors for real estate investors. Palm Beach County boasts a diverse and flourishing economy, with a particular emphasis on a robust luxury market. Additionally, the presence of jobs in various sectors, including real estate, healthcare, and tourism, provides a stable foundation for the real estate market. The economic vitality of the region enhances the potential for property appreciation and sustained rental demand, making it an attractive prospect for investors.
3. Livability and Quality of Life
Livability is a key consideration for real estate investors. Palm Beach offers a high quality of life, featuring beautiful beaches, cultural attractions, and a pleasant climate. The city’s desirability as a place to live can positively impact property values and rental demand. As investors evaluate potential markets, the overall livability and attractiveness of Palm Beach contribute to its investment appeal.
4. Rental Property Market Size and Growth
The size and growth of the rental property market are crucial for investors seeking long-term returns. Palm Beach County’s surging interest in mid-market homes, coupled with sustained population growth, contributes to a growing rental market. Investors can tap into this demand by providing rental properties catering to diverse segments of the population. The city’s popularity among both permanent residents and seasonal visitors further enhances the potential for a thriving rental market.
5. Other Factors Related to Real Estate Investing
- Mortgage Rates: While mortgage rates have risen, understanding the current rates and their potential impact on buyer behavior is essential for investors. The bifurcated growth in the housing market, as highlighted by MIAMI REALTORS® Chief Economist Gay Cororaton, emphasizes the importance of recognizing these trends for strategic investment decisions.
- Inventory Dynamics: Palm Beach’s inventory challenges, with a significant decrease from pre-pandemic levels, create a seller’s market. Investors should consider the supply-demand dynamics when assessing investment opportunities.
- Market Appreciation: The historical appreciation in median home prices and the city’s attractiveness for wealth migration contribute to the potential for real estate market appreciation, providing a favorable environment for investors seeking capital appreciation.
- Economic Impact: The real estate market’s contribution to the local economy, as reflected in the economic impact of home sales, adds another layer of consideration for investors evaluating Palm Beach. A thriving real estate market can have a positive cascading effect on various industries, further supporting investment prospects.
Considering Palm Beach’s population growth, economic vibrancy, livability, rental market dynamics, and various other factors, the city presents a compelling case for real estate investors. The sustained demand for properties, coupled with the region’s overall desirability, positions Palm Beach as an attractive destination for both short-term gains and long-term investment success.