Jupiter real estate market softens further. Should you be worried?
Pending home sales in the Jupiter area fell another 7% in July. It was the 3rd straight monthly decline and brings the number of homes under contract to the lowest levels of the year. If we believe historical trends, it is likely they will continue to fall through the end of the year. No doubt we are in the summer months, and some of this is seasonal, but last year pending sales were up during July so you need to dig deeper to determine what is effecting today’s real estate market.
Sales are driven by a multitude of factors but the most direct influencer is inventory. And once again in July, the number of homes on the market were down for the 5th straight month. Again, much of this can be cast aside as typical seasonal patterns. Buyers saw some hope over the first two weeks of the month as the number of homes that came on the market actually increased.
Pricing pressure has been to the downside for the past two months. Over the past week, more than 9% of all single family home sellers in Jupiter have dropped their asking prices. For many, this was not their first reduction. We are still a few days away from Paradise Sharks publishing our analysis of single family home prices for July but it’s clear they will be down and it be the biggest one month drop in a long time. Watch for that median price to fall to the lowest levels we have seen since March.
Another significant driver of sales is interest rates that have been holding around the same levels for 22 weeks. So far this week, the rate on a conforming 30 year fixed loan is up 6 basis points. The good news is the Fed met yesterday and held their rates steady, but many expect another hike in September. We had a closing this week and the attorney handling the title work told me he just closed a sale where the buyer’s rate was 5.75%. Yikes, if rates continue to climb it will mean one thing for home prices. It will drive them lower.
One metric Paradise Sharks keeps a close eye on is median rental prices, as if they are not moving higher neither will prices. Median rents in Jupiter have been holding steady now for almost three years. Condo rents are unchanged since 2016 while single family home rents are up about 3.5%. Over that 3 year period, median condo prices are up 24% and median single family home prices are up 21%. When we see this big of disparity, one of two things can happen. Rents can rise or prices can fall.
Another metric we watch closely are the number of homes that close above the $1M threshold as when they move higher so does the overall market. Last year, we broke the all time record and as of 3 months ago we were 20% higher than year ago numbers, But sales in this segment have slowed over the past 90 days and today we are only 6% above last year’s numbers. We need to watch closely and ensure there are not further pullbacks. Holding above last year’s numbers is very important at this juncture.
So, if you own a home in the Jupiter area should you be worried? Not overly so, but until we get through the summer and fall months it’s hard to tell what direction prices will head. Home prices have moved higher, but wages have not. In the Jupiter area, we have a lot of seasonal buyers where price is not as big of concern but, for the working man, home affordability is a real problem. If interest rates continue to climb that problem gets even bigger.
Watch the overall economy, that right now is strong and we need that strength to continue. If that happens, prices may move a bit higher but not dramatically. If the value of your home is critical to your overall financial position, keep a very close eye on what is going on in your neighborhood. Inventory levels, sales level, days on market, price reductions are all important. While timing the market is not easy, the numbers can give you a distinct advantage.
Whenever doing real estate of any kind seek information. Make educated decisions. Interview at least 3 brokers and ask a lot of questions. We are happy to provide you a list of questions to ask even if you don’t have Paradise Sharks on your interview list. However, we LOVE to interview and would be honored for the opportunity to earn your business. Contact us anytime at 561.308.0175 or firstname.lastname@example.org.