Palm Beach County home prices in April rocketed to levels not seen since before the economic crash of 2008.
Propelled by investors buying quickly and with cash, the $265,000 median sales price for a single-family home last month was 26 percent higher than the same period in 2012 and up 6 percent from March, according to a report released Wednesday by the Realtors Association of the Palm Beaches.
The last time prices were above $260,000 was September 2008, one month before what is largely pegged as the beginning of the global recession.
Realtors note that the swift price rise can be attributed to increases in sales of higher priced homes and a sharp drop in distressed sales. Homes priced between $300,000 and $399,000 saw a 66 percent jump in sales last month from the previous year, while sales of bank-owned foreclosures were down 50 percent.
Competition has also been a fierce price driver as inventory fell 50 percent from 2012 to a 5.3 months’ supply.
But South Florida real estate analyst and consultant Jack McCabe is wary of the market surge. He calls the corporate interests elbowing out traditional buyers and hiking up prices the “story of the decade.”
“There is no reason for prices to be increasing 26 percent in a year, it makes absolutely no sense,” McCabe said. “Real estate is no longer the domain of the individual buyer and consumer, it’s the domain of corporations, hedge funds and affluent, high net worth investors.”
Last month, 52 percent of home sales and 80 percent of condo purchases were cash deals.
Wall Street investors began buying homes in earnest in the spring of 2012 with the idea of renting until a market turnaround. McCabe said counties with the highest investor interest are Hillsborough, Miami-Dade, Palm Beach and Broward.
“I knew they would start buying and bolster prices, but what I didn’t see coming is that they would start overpaying and gobbling up everything they could get so quickly,” McCabe said.
The 2,962 combined total sales of homes and condominiums last month in Palm Beach County was the highest since 2007.
Statewide, the Florida Realtors group reported Wednesday that single-family home sales were up 17 percent in April from last year, while prices grew 14 percent to a median of $165,000. Cash sales made up 48 percent of purchases.
Home sales nationally were not as robust as in Florida, seeing only a .6 percent increase in April from March to a seasonally adjusted annual rate of 4.97 million. Sales were up 9.7 percent from the previous year.
The national median home price was $192,800 in April, up 11 percent from April 2012 and marking 14 consecutive months of year-over-year price increases. The last time that happened was from April 2005 to May 2006.
“Buyer traffic is 31 percent stronger than a year ago, but sales are running only about 10 percent higher,” said Lawrence Yun, chief economist for the National Association of Realtors. “It’s become quite clear that the only way to tame price growth to a manageable, healthy pace is higher levels of new home construction.”
Or, in Florida’s case, the release of shadow inventory — homes repossessed by banks but not yet listed on the market or in the process of foreclosure.
Boynton Beach resident Cathy Pack is scheduled to close on the sale of her four-bedroom home today, but is moving in with a friend because she was unable to find a new home following two months of searching.
The sale of her house was not easy, either. Homeowner association rules that require buyers to own a home for three years before renting barred her from selling to a cash investor and appraisals were coming in too low for buyers with financing. The deal finally went through after one buyer got a loan through a small bank and the home appraised for a lower asking price.
“I’m just going to chill out and take it easy for a while and hopefully buy something later on down the road,” said Pack, who is considering moving to another state. “I’m thinking if I don’t find something soon, I won’t be able to find something at all.”
By Kimberly Miller