Palm Beach County continues to be one of the most interesting real estate markets in the country. Currently, the median listing price for Palm Beach County homes is hovering at $565,000. That's a 3.5% increase over last year. However, an uptick in prices isn't the full story. Buyers who have felt shut out in recent years may finally be seeing opportunities to make offers as inventory steadily increases.
Shifts in Buyer Dynamics
Over the past few years, the huge influx of new residents who have been able to come in strong with cash bids and over-offer bids has left some local buyers feeling frustrated by the lack of opportunity to enter the market.
Optimism Amidst Increasing Inventory
While there's still plenty of demand for the high quality of life and beach living that Palm Beach County offers, the good news is that inventory is slowly increasing. This should create optimism for buyers who have been waiting for a big break that will allow them to get offers accepted. It may also help to take some of the urgency out of the offer process. However, it's important to know that the average time on the market remained consistent at around 60 days for the second year in a row in 2023. While that means that homes are being snapped up relatively quickly, it feels like a real break for homebuyers who were looking at homes back when time on the market was closer to 30 to 40 days during a long stretch between 2021 and 2022.
Inventory Trends
In December of 2023, Palm Beach County added 2,820 new listings to its real estate inventory. While that's nowhere near the 4,000 to 4,500 we were seeing in the stretch from 2017 to 2019, it is a big improvement from the 1,900 we saw during the height of the 2020 frenzy. With December being a notoriously quiet month for listings, it's better to look at overall listing numbers to see why there's so much optimism about inventory levels. During most of 2023, inventory in Palm Beach County consistently stayed between 2,500 and 3,000.
Market Performance in 2024
Where does this leave the Palm Beach County real estate market in the first quarter of 2024? In January, the median sale price jumped to $465,187. This represents a 6.9% year-over-year increase. While inventory is creeping up slightly, the increase in available listings hasn't caused prices to come down. The fact that a larger inventory hasn't brought down house prices in Palm Beach County significantly is just a testimony to the enduring appeal of the area.
Potential Impact of Interest Rate Changes
Like the rest of the real estate markets around the country, Palm Beach County's market is affected by interest rates and overall economic factors. The Federal Reserve has indicated that it will cut rates at some point in 2024 to put an end to a spree that saw the federal funds rate increase 11 times between March of 2022 and July of 2023. However, both homebuyers and sellers are left to play a guessing game when it comes to when that might happen. While the rate decrease could happen as early as May, rate drops might not occur until the summer or fall Federal Open Market Committee sessions.
Outlook for Palm Beach County
If rates go down in 2024, more homeowners who have been sitting on their homes over reluctance to trade in their low rates will likely list their homes. At the same time, people who have been waiting to buy until rates come down will be jumping into the market. While lower rates can drive up housing prices, buyers generally have more buying power because their payments won't be tied up with interest. For Palm Beach County's market, that could mean that the demand for housing gets focused on larger homes with more bedrooms. When all is said and done in 2024, Palm Beach County's appeal as a haven for people seeking better weather and increased quality of life ensures that the market here is certain to remain vibrant.
Sources: fred.stlouisfed.org, Zillow, Rockethomes, CNBC.
