A steady climb in home prices is predicted for Palm Beach County, but its neighbors to the south will see declines of more than 2 percent by early next year, according to a recent study that local economists and Realtors were quick to challenge.
The 0.6 percent increase in Palm Beach County prices from January to the first quarter of 2014 was forecast by the Irvine, Calif.-based company CoreLogic in a price index report it produces with Case-Shiller. The analysis also predicted pricing drops of 2.4 percent in Broward County and 2.7 percent in Miami-Dade County during the same time period.
With South Florida still recovering from one of the worst real estate crashes in history, talk of falling prices is a sensitive topic that drew a piqued response from some local experts.
But David Stiff, chief economist of CoreLogic Case-Shiller, said Palm Beach County experienced less of a run-up in prices than Broward and Miami-Dade. The quick ascent set them up for a short-term price drop before recovering and stabilizing.
“We think Broward and Dade are a little bit ahead of where they should be relative to income growth in the area,” Stiff said. “The dips we have in the Florida market are pretty short and then things become more steady appreciation.”
Palm Beach County home prices are forecast to see a 5.2 percent increase between early 2014 and early 2015, according to the CoreLogic report. Broward and Miami-Dade will also see a restart in 2014 with increases of 0.6 percent and .3 percent respectively.
“I am shocked that they’re predicting a decline in Broward and Dade because I see upward movement in all three counties this year and into next year,” said Brad Hunter, chief economist of the Royal Palm Beach-based housing analysis firm MetroStudy, about the short term declines. “I see builders raising prices at a pretty frenetic pace.”
The price analysis is based on housing demand, population growth, household income, change in household demographics, strength of the local economy and home price momentum.
Stiff acknowledged South Florida pricing is difficult to predict because of such variables as high investor interest and hundreds of thousands of homes in foreclosure.
“Florida is complicated,” he said. “There will be years and years of above normal foreclosure sales.”
Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach, said spikes in home prices have been artificially inflated by investors grappling for low-priced homes to rent out. But he doesn’t believe there will be a drop in South Florida prices anytime soon.
Investors are still buying, he said, even if they have to pay above market value.
“They are showing a willingness to outbid everyone with closings that are 25 percent above list prices,” McCabe said.
Palm Beach County home prices hit a high point in early 2006, according to the CoreLogic report, and are still 45 percent below that peak level. Broward’s prices are 43 percent below their peak reached in the second quarter of 2006. Miami-Dade County prices are 44 percent below their early 2007 peak.
“Prices are just going up and up and up,” said Dean Hooker, agent-owner for the Pompano Beach-based Southeast Realty. “There is such a huge pent up demand.”
Hooker said he closed a deal recently on a bank-owned condominium that had 25 offers and sold for $10,100 above asking price.
With much of the bargain basement inventory being scooped up by hedge funds and corporate interests wielding cash, traditional homebuyers are having to look at higher-priced homes.
Brian Saver, principal broker for McWillams Ballard real estate in West Palm Beach, showed a $489,000 four-bedroom, three-bathroom home with a one-bedroom, one-bathroom garage apartment in Jupiter’s Abacoa on Monday. It’s been on the market one week and has already had several showings with two additional ones scheduled today.
“For me, I’m selling to all single families now, actual users,” Saver said. “I’ve been blessed with cash buyers for the past several years and now it’s a little more normal.”
Home price predictions 1Q 2013 through 1Q 2014
Palm Beach County, 0.6 percent increase
Broward County, 2.4 percent decrease
Miami-Dade County, 2.7 percent decrease
Predictions 1Q 2014 through 1Q 2015
Palm Beach County, 5.2 percent increase
Broward County, 0.6 percent increase
Miami-Dade County, 0.3 percent increase
Source: CoreLogic Case-Shiller
By Kimberly Miller