2023 Palm Beach County home sales were plagued by low inventory but hit record high prices

Sales of Palm Beach County single-family homes slumped in 2023 as wary buyers faced higher interest rates and rising insurance costs, but a lack of choices also spiked prices to a median of $597,000.

A report released Friday by the Broward, Palm Beaches and St. Lucie Realtors group found last year’s median price was nearly 5% higher than 2022, setting an annual record in a county that has watched housing prices for existing homes skyrocket since the pandemic. The median price in 2020 was $389,000, 53% lower than in 2023.

Sale prices peaked in June at a record median of $625,000.

The number of closed sales last year sagged to 13,868, which was down 8% from 2022, and about a whopping 23% lower than 2020.

“The lack of inventory was real, and interest rates were also a huge problem. Those were the two distinctions in 2023,” said Realtor Sabra Kirkpatrick, who is sales manager for Brown Harris Stevens. “The market pressed pause for a year, but I do see that changing this year and we are extremely busy.”

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Kirkpatrick said cash buyers, which accounted for 45% of sales last year in Palm Beach County, are still watchful of interest rates because they “do effect everyone’s bottom line.”

A 30-year fixed mortgage had an interest rate of 6.6% on Thursday, according to Freddie Mac. That’s down from 7.79% in late October and the lowest level since May 2023. It’s still nearly double, however, what it was in mid-January two years ago.

Federal Reserve officials said last month they did not expect to raise rates again as the run-up over the past two years has helped to slow inflation.

“This is an encouraging development for the housing market and in particular first-time homebuyers who are sensitive to changes in housing affordability,” said Sam Khater, Freddie Mac’s Chief Economist in a press release about the 6.6% rate. “However, as purchase demand continues to thaw, it will put more pressure on already depleted inventory for sale.”

There were 4,575 existing homes for sale in December in Palm Beach County. That’s up 13% from the same time in 2022. The months supply of inventory was at 4 months, up 25% from December 2022.

Despite the increase, it's still considered a seller's market. A balanced market where neither the buyer or seller has the advantage is considered a 5.5 to six months' supply.

Boosting economic optimism in Palm Beach County last year were continued low unemployment rates. December’s rate was 3%, which was higher than the year’s lowest rate of 2.3% in April but still below the national unemployment rate of 3.5%, according to report from Career Source Palm Beach County.

The report noted that while agriculture and tourism are still hefty parts of Palm Beach County’s economy, the industries driving job growth with increasing wages are finance, insurance, professional business services and real estate.

That jibes with the influx of financial firms opening offices in West Palm Beach, which has earned the city the nickname “Wall Street South.”

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Julia Dattolo, president and CEO of Career Source, cautioned against thinking jobs will continue to increase at the same pace, however.

“In 2024, we expect the labor market to cool a bit from the red-hot levels of the past couple of years as the gap between labor demand and supply gradually narrows,” Dattolo said in a statement.

Florida Atlantic University housing economist Ken H. Johnson said although sale prices are stabilizing, Florida markets still rank high nationally as overpriced when compared to long-term trends. His most recent report from late November found the Miami market, which includes Palm Beach, Broward and Miami-Dade counties, was 36% higher than where it would be if there was no pandemic-induced splurge.

“The housing market is regaining some sort of sensibility,” said Johnson, who doesn’t expect any wild swings in 2024. “The chances of having a significant housing crash are very, very small. The chance of having prices accelerate at double digit rates is also small. The two extremes just aren’t going to be there.”

Johnson said he believes that instead of a steady decline in interest rates, the Federal Reserve Board will flip flop around this year from being “very aggressive to being very dovish” in its approach.

“I think we will see some decline in interest rates but I don’t think they will come as early as many have forecasted on financial news networks,” Johnson said. “It will be later in the year.”

Realtors said concerns over rising insurance costs have added to buyer hesitancy.

Florida homeowners pay an average insurance premium of $6,000, which is more than three times the nationwide average insurance premium of $1,700, according to the Insurance Information Institute. Also, the Institute says Florida's average premium has increased by a cumulative 102% over the past three years.

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Still, the number of Sunshine State residents increased by 1.6% over the past year, according to estimates released in December by the Census Bureau. That was the second-highest percentage increase in the nation, with South Carolina ranking at the top with 1.7% growth.

In sheer numbers, Florida gained an estimated additional 365,205 residents in 2023, which came in second behind the 473,453 people who moved to Texas.

The top three states that lost residents in 2023 were New York (-101,984), California (-75,423), and Illinois (-32,826).

Kirkpatrick said she’s seeing more of a mix of local and out-of-state buyers in the market as compared to the early years of the pandemic when there was a rush of people relocating from areas in the Northeast, Midwest and California.

“It was such a strong sellers market for so long and now it’s shifted some,” Kirkpatrick said. “Buyers can negotiate again whereas there were a couple years when they had to pay over the asking price, or the price was the price and that was it.”

The median sale price for a condominium or townhome in Palm Beach County last year was $305,000. That's just 1.7% higher than in 2022. The total number of closed deals on a condo or townhome was 801, down 3.6% from 2022.

Kimberly Miller is a veteran journalist for The Palm Beach Post, part of the USA Today Network of Florida. She covers real estate and how growth affects South Florida's environment. Subscribe to The Dirt for a weekly real estate roundup. If you have news tips, please send them to kmiller@pbpost.com. Help support our local journalism, subscribe today.

This article originally appeared on Palm Beach Post: Real estate West Palm: Home sale prices reached record highs in 2023