• What Is Palm Beach Real Estate Market Doing Radio Show with Brian Mudd

What Is Palm Beach Real Estate Market Doing?

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Brian Mudd:

This is the Treu Real Estate 911, Podcast with Lisa Treu. Lisa will share up to date real estate information with you that you need to know.

Welcome to Treu Real Estate 911, along with your local Real Estate pro Lisa Treu, here to bring you all the latest information about Palm Beach County Real Estate you need to know to make informed decisions. By the way, is now a good time to sell? Well that might depend on, where you live, the value of your home and so much more.  Lisa is going to bring in that information. Should I sell? Should I move up buy? With all these types of different questions we're going to have some answers throughout the course of today's show.

Before we get started, if you're not already there, go to treurealestate911.com, that's treurealestate911.com. Once you go there, you'll see why it's the best local resource you're going to find for real estate information, including the ability to search the MLS in real time like a real estate pro. Great videos and tips from the Treus about local real estate, things that you might not have considered that yes should. How to always stay ahead of the curve because especially on the more affordable side you got to move quickly, and the Treus are ready to help you do just that and have success.

Now, you may also reach out to the Treu's seven days a week by calling 561-972-8326 that's 561-972-8326.

As we take a look at the most recent real estate information for a Palm Beach County, the first thing that came to mind was, there are lots of stories under the headlines, but the overall headline itself is steady as she goes.

Lisa Treu:

It is very steady, and we still do have some very hot areas. We have some very cool areas, but when you look at the county in the single family home real estate statistic. It is absolutely a very even keel year over year and that could be good news, it could be a challenging news depending on whether you're a buyer or you're a seller but it is the reality. I think information is power so that you can position yourself in the right way to get the results that you want.

Brian Mudd:

First thing that I'll want to speak to based on what we're seeing here is the stability of our real estate market. So many folks who went through the recession had been concerned that our real estate market had been appreciating well above the national average, once again in really since 2012. Also, faster than incomes have been rising and will this thing get out of control again?

Well, here's the good news. We have seen incomes rise in a Palm Beach County by 3.7% year over year, while we're taking a look at prices that rose just one person. Actually for the average resident, Palm Beach County, housing is now more affordable today than it was a year ago today. That's something that should make people feel a little bit better about the stability of the real estate market.

Lisa Treu:

Yes. you cannot continue with the appreciation that we had longterm, right? We were seeing for a few years double digit and then strong single digit appreciation, and at some point we know it has to slow down or it over corrects and nobody wants to go through that again. Those of us that have been here a while know that Florida was hit so hard because the speculation market was so strong in South Florida in particular, and we paid for it not just at that time but for really almost a decade of trying to get the real estate back to where it needed to be.

I'll take slow and steady any day over this rollercoaster ride because the downward spiral is very painful, and it costs many people a lot more than just their house, it really did impact them longterm. I think we're in a great place.

Now, there're some challenges at been here for many people, and it's catching up the mindset with the reality of the market because you're at the water cooler, you're talking to your friends, and you hear, "Oh my gosh, my house sold in a day." Look, we do that too and there is a strategy to that and yet not every neighborhood, not every house, and not every price point is going to have those results.

Brian Mudd:

Specifically, when we talk about the median sale price being $345,000 that really doesn't tell the story. The 1% appreciation over this time last year, we really have the tale of two markets that are based on price. Once again, this has been the case for a while, but the more affordable single family homes, that's where it really seems like we're seeing really strong activity with the luxury market that's not doing as well. Tell us some of these storylines that are inside of these numbers.

Lisa Treu:

Well, think of it this way. We've said our median sales price is 340,000, so it would make complete sense that for single family homes 400,000 and under, it would become obviously a very hot seller's market. When you have homes that are in the three to $400,000 range, you have two point nine months of inventory. What does that mean? Well, it means it's a very, very, very strong seller's market. If we didn't list any new homes in 2.9 months, all of our homes that are for sale right now would be sold based on the current rate of closings.

Brian Mudd:

That's incredible.

Lisa Treu:

Right, 2.9. As you increase the story changes a little bit where it gets a little bit confusing, and hard to really read unless you're an expert in the market doing a lot of business is that next price point up. When you go to four to 600,000, we're at 4.8 months of inventory, so that still sounds great, right? You're still a seller's market, anything below six months is a seller's market.

The challenge is that we have in that price point two markets definitely, you have the super hot seller and you have the cooler buyer market. It averages out to 4.8, but you could be a $500,000 single family home in a hot market and have multiple offers, but in another neighborhood, even in the same city you could be where you're sitting for two or three or four months.

Brian Mudd:

Once again, you take a look at and say even the million dollar plus market, we see a near 13% increase in sales year over year and you go, "Great, that is really terrific." But, then you'd take a look and while 105 homes sold, 167 more came on market, despite that double digit increase year over year, we still had 62 additional properties come onto market in that profile, then what actually sold? Meaning that it's becoming that much more challenging for everybody that's listed in that market.

Lisa Treu:

We have 14 months of inventory-

Brian Mudd:

That's incredible.

Lisa Treu:

It would over a year if nothing else was listed, and just those properties stayed on the market. It would take us over a year to get everything cleared out. That's pretty substantial.

Brian Mudd:

Is the problem on the luxury side that we don't have the buyers relative to the folks who genuinely want to sell? Or is it a pricing problem which we have seen frequently when it comes to luxury listings?

Lisa Treu:

I think it's a couple of things. Obviously, there's fewer buyers for million dollar plus properties, and yet there's also fewer of them. Right? I believe that there's not enough attention to getting the formula right, especially when we get into those more competitive buyer market areas of getting the marketing right. Many times I will look at a multimillion dollar home, and I'm shocked at the photos, just that alone. We have to sell, the buyer's odds are, it's not sitting in that neighborhood. They're in the Northeast, they're in Canada, they're somewhere overseas.

If they're looking online and the property is not really portrayed in its best light, they're just passing it by. That happens time and time again. I think it's getting the marketing right, getting the pricing right, and many times people are overpricing. My advice to all sellers, everybody in Palm Beach County is, if you are not able to list your home at the price that the market really will warrant right now, leave it off the market. That will allow our real estate continue to move and appreciate instead of giving the buyers that feeling that the whole world is for sale, and that there's no urgency and they can offer low offers. We actually hurt ourselves when we overprice as a county, when we overprice their properties.

Brian Mudd:

You'd also been mentioning that there had been a bit of a change in terms of some of the more affordable a non single family home type, specifically town homes, condos. What's going on in that market?

Lisa Treu:

It's interesting because we talk about single family homes a lot and yet we work with a lot of sellers that have town homes and condos, and we're seeing that market cooling off faster than the single family home market. We're also seeing prices sliding back a little bit or appreciating not happening even when maybe if they're in the same neighborhood where they have single family homes that product is appreciating.

It's really important right now because appraisers, what we're seeing is they're being very cautious right now because this thing of, well a buyer's willing to pay it, therefore it's worth it. You can't say that to an appraiser right now because they are very concerned about are we really valuing properties correctly or are we just doing repeating what we've done in the past?

Brian Mudd:

Lisa I suppose you're a cash buyer and the one bit of additional good news we did at least for August, year over year see even more cash come online. That's something for folks who also are concerned about stability in our market, that anytime you're seeing that yes, prices are higher but we have even more cash that's been used. That really gives you an idea of the sustainability of what we have going on. So yeah, there's a 1.2% increase in the number of homes are being closed in cash. While we're talking about those buyers, are they cross the profile a affordable and on the luxury side, folks are looking with cash?

Lisa Treu:

Yes, we're seeing second home buyers many times they're paying for their luxury homes with cash. We're seeing investors, many investors paying cash, and that tends to be on maybe the lower end, maybe the buy and fix and flip, buy and hold. Yet, once again we see, half a million, million dollar, million dollar plus properties that are all cash.

Brian Mudd:

Now, more we are talking about, this influx market where you have many different lanes, single family homes that are affordable hot, town home even at the same price, not necessarily doing so well. Luxury properties really in a buyer's market, where do you see the opportunities?

Lisa Treu:

Well, there's opportunities in any market. First of all, I think that if you're a buyer, the opportunity is really just having somebody who understands the market. We just helped a buyer find a property, it was in West Palm Beach and we saw that was the deal in the neighborhood. It was just priced, it fit exactly what the buyer is looking for but the numbers worked. We were actually able to get them instant equity on this property because the house wasn't in bad shape, but it wasn't in, I always call it HGTV.

The buyer came in and saw the potential and said, "Okay, I'm going to invest this little bit upfront versus paying for a home that's already had this work done and because of that I'm going to get a better deal. There are opportunities and by the way, that was in the $400,000 range. There are opportunities in all price points. He might just need to be a little more flexible and say, "Okay, this has almost everything I want. I need to make these couple of changes." If you are moving up buy, and I know it seems we almost always say this, that is the opportunity.

Brian Mudd:

It's been working for years now, which is why, and even still today. I was going to ask you about interest rates, mortgage rates, how much of a factor that's playing into this. Even still, we are talking about affordability, even with the 30 year fixed that is in the four and a half to 5% range. You're talking about affordability of that is still about half of what the historic rate is for a 30 year fixed rate mortgage. It's highly sustainable and a good economy.

One of the things that is so much different to take a look at all this is, we now have wage growth, that's back to a healthy economy status. In fact, year over year when you factor in the tax cuts, net take home pay is up anywhere from 5.7% to about 6.7%. We really do have the ability for many people to be able to sustain these higher mortgage rates, but to the extent that it's impacted the market, what do you see?

Lisa Treu:

We're really not seeing much of an impact with the increase in interest rates that we've seen over the last year, year and a half, we just haven't. But, now buyers that were maybe marginal on the fence, yes, they can't qualify. If somebody was looking 18 months ago and they're coming to us, and they barely could get approved. They're having to really have an open mind conversations about what, how do they get into the market? Your first home doesn't have to be your dream home, right?

Brian Mudd:

See other HGTV factor.

Lisa Treu:

What you have to do is you have to get into the market. You have to make really smart decisions that have you have an exit strategy that you can live with because even if the market would correct, we always talk about what is the exit strategy? What are you going to do if the market does correct? Because if you go in with a plan, especially this worst case scenario, then it always works out.

Our clients that do that have the best success longterm, and remember we have clients that we've worked with for ... we're now working with generations, not just one person we're working with ... we worked with grandparents, their kids and now we're working with their grandkids. We want to have that strategy in place so that you're not stuck. You never feel stuck in the real estate market.

Brian Mudd:

There is something that is interesting too, is we're talking about the economics of what's going on. I'm looking at this number and seven billion dollars. We've had seven billion dollars of real estate transactions through August.

Lisa Treu:

It is crazy.

Brian Mudd:

In Palm Beach County, that is remarkable, that's the highest I've seen 10% increase year over year in terms of the actual amount of money that's come into it. Again, you've had about a third of it that's been all cash on top of it When we're talking about, that type of influx of money into our economy along with all of the different communities and property types. Your point is well taken because many folks are ultimately making sure that they have a strategy, whether it is a place we're going to settle down with or in many cases an investment or a second home. We still see that in Palm Beach County it's cheaper to buy and make the mortgage payment than it is to rent.

Lisa Treu:

It's definitely still smart in many cases to go ahead and make that purchase. The other thing about that seven billion is that how many other people have been put to work? I don't think people realize this with every real estate transaction, it really does fuel our economy. Obviously all the people that are employed during the process, the lender, the title, the inspectors, the termite, the survey companies or real estate agents.

When people get into a home and you know this, you started spending money. You are buying blinds, you're buying fans, you're buying lights, you're hiring people to do work, you're renovating, hardly anybody buys a house and doesn't go shopping after, right? You have to buy something.

It's great for our economy with each closing that happens in Palm Beach County because it literally puts people to work. The one thing I'm having an interesting conversation with now, I have a couple of what I would call fixer uppers or opportunities, diamonds in the rough. We've had buyers for them and they can't get people to do the work.

Now, my belief is probably because they're leaving our state and going to help people in the hurricane impacted areas, but the contractors are getting very busy-

Brian Mudd:

They are. I can speak to that very personally with the work that we're having done an hour home right now. Without a doubt, they're often booked a month, two months, three months or more out.

Lisa Treu:

When you're thinking of selling, here's my best advice people is, to look, is not to listen to what everybody's telling you because they may live in a completely different area, have a different property product, whatever. Also, they may not have the marketing right or they may not have the pricing right, but sit down and create a proper strategy with us and let's figure out how do we get it priced right? How do we get the condition right? Right now buyers are paying more for properties that have been staged properly, that have everything ready and are in HGTV.

If you renovated 10, 12, 15 years ago, that's not an update. It does, yes, it's better than original, but it is not something buyers are going to pay extra for, they want the modern style. Now, that doesn't mean if you're listening, don't go and rip out your kitchen. Talk to me first because you may not ever get that money back, and yet what we're seeing is people are just putting properties on the market thinking, "Oh, it'll sell." because everything selling. That is not the case, the ones that have the formula right or selling.

Brian Mudd:

Well, the Treus they are ready to help you. Again, buying, selling questions. 561-972-8326 that's 561-972-8326, and if you're not already there, go to treurealestate911.com.