Whether you are a homeowner trying to sell your home and get into another, a first time buyer, or an investor, you know all too well the attractiveness of the South Florida real estate market. 2014 has set recent records in rising home prices (in metro areas) as well as in cash sales as it seems everyone and their mother wants a piece of the market.
Home Prices in South Florida Outpace Nation
According to the Standard & Poor’s/Case-Shiller index, the home price index for South Florida – made up of Palm Beach, Broward and Miami-Dade counties – rose 10.5 percent in August, making it the largest annual gain among 20 metro areas in the U.S. While home prices in the tri-county region are beginning to soften, the jump put the homes in this area on record highs not seen since June of 2002. It should be noted that the Case-Shiller index lacks local Realtor board numbers and does not account for condominiums. However, LiveWPB’s very own Jud Whitehorn crunched some numbers regarding the Downtown West Palm Beach condo market and found that although there were less sales than in 2013, they were for considerably more money. You can read more about that here, in Jud’s post on Downtown West Palm Beach – By the Numbers.
Good News for Homeowners
The obvious good news for longtime homeowners is that they now have more equity in their homes but also that the prices of real estate are leveling off, thus helping to prevent another housing bubble. As for new buyers, the prices of homes may present a challenge, but mortgage rates are still hovering around four percent and there are still some good condos for sale in Downtown West Palm Beach.
Cash Sales: The Queen of South Florida Real Estate Transactions
Data on third quarter cash sales in Palm Beach County reveals 65 percent of real estate transactions went down without a mortgage. This is slightly higher than the rest of the state where cash sales made up 53 percent of all condo and single family home sales during the same time period. While these numbers have dropped slightly compared to last year, it still remains the highest in the country, where cash sales account for 34 percent of home buys.
According to some, the cash sales aren’t coming as much from investors as they are from buyers seeking mid-to-high-end homes. These buyers are now coming out of the woodwork to take advantage of the perks cash sales offer: no appraisals, no inspections and the avoidance of Florida documentary stamp taxes paid on a mortgage.
The tri-county areas of Palm Beach, Broward and Miami-Dade, specifically, had 59 percent cash deals last quarter, and take up the number one spot in Florida, a state with eight of the top 10 metros areas nationwide with the highest percentages of cash sales.
Cash Sales and Their Effect on First Time Buyers
As institutional buyers made up as much as 4.7 percent of homes sales in Palm Beach County, they do present some competition to those seeking mortgage-based transactions. In order for first time buyers and homeowners (looking to sell and by another home) to compete with these cash players they may need to make more competitive offers as it still seems to be a bit of a seller’s market. The key is to hire a knowledgeable realtor who can help negotiate deals on your behalf and find properties as they come to market to capitalize on eager sellers.