Higher home sales and rising prices continued to trend in Palm Beach County last month, but economists warned that interest rate shifts and falling investor activity may lead to a cooler market in coming months.
Sales of existing single-family homes in the county grew 19 percent in October from the same time in 2012 with 1,364 properties changing hands, according to a report released Wednesday by the Realtors Association of the Palm Beaches.
At the same time, the median price for a Palm Beach County home was up 14 percent to $253,000.
Statewide, home sales were up 6 percent from last year, with prices rising 17 percent to $169,000.
In Palm Beach County, annual price increases were as high as 46 percent in Palm Beach Gardens, which had a median sales price of $299,000 in October. Boynton Beach’s prices grew 17 percent to $169,900. Jupiter saw a nearly 13 percent hike to $279,250.
About 49 percent of home sales in October were cash deals, a 2 percent increase from last year and a signal that cash investors are still buying.
But Sherry Lee, broker/owner of Lee Property Sales in West Palm Beach, said investors are getting turned off by the higher prices, hopefully leaving more inventory to traditional buyers and snowbirds who are starting to arrive for season.
Palm Beach County had about a 5 months’ supply of single-family homes in October, down 25 percent from last year.
“I see some investors scrambling around looking, but they aren’t finding the numbers they want,” Lee said. “They have to achieve a certain rate of return and if they don’t see that, they stay out.”
All-cash sales made up 31 percent of transactions nationally in October, up from 29 percent last year.
The national median existing-home price for all housing types was $199,500 in October, up 12.8 percent from 2012, which is the 11th consecutive month of double-digit year-over-year increases.
Lawrence Yun, the chief economist of the National Association of Realtors, said an “erosion” in buying power and low inventory will lead to a leveling of the market, with slower price gains and sales.
But mortgage interest rates will have the biggest impact on real estate, said Mike Larson, a real estate analyst at Weiss Research in Jupiter.
According to federal mortgage backer Freddie Mac, the national average rate for a 30-year fixed mortgage was 4.19 in October. That’s down from 4.46 in September, but up from 3.38 percent during October 2012.
Interest rate increases are expected when the Federal Reserve reduces its bond-buying, something Larson predicts will happen in 2014.
“We’ve truly seen housing find its footing again,” Larson said. “That being said, interest rates will head higher in 2014. That will lead to a cooling of the market, rather than a collapse.”
You can leave a response, or trackback from your own site.