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Today we have a brief recap of the real estate market in 2017 and a few very important points to be aware of as we move through the first quarter of 2018.
Let’s start with last year. We started the year with an average sale price of $340,000 and throughout the year, we saw more and more homes sell each quarter as well as a steady increase in home price. The year came to an end with a total of 31,000 homes sold at an average sale price of $382,000, a 12% increase from the beginning of the year.
As we move into 2018, there are a few things you should know about the current real estate market in Palm Beach County.
1. Housing inventory remains extremely tight. Since the first quarter of 2017, the inventory has decreased by 2% in our market. With fewer homes on the market, it’s easier to get your home sold for the highest price possible. That’s part of the reason we’ve seen such a large jump in the average sale price.
2. Buyers are increasingly optimistic. Despite the tight inventory, homebuyers are increasingly optimistic and continue to look for homes. Some of this has to do with the recent growth in income and job stability. Loosening lending standards are also making many homebuyers eager to take advantage of current mortgage rates, which slipped under 4% recently.
3. The new tax reform bill will impact the market. The federal government recently passed the Tax Cuts and Jobs Act, which majorly overhauled our tax code. While it’s unclear how this will affect the real estate market as a whole, there are several changes that do not favor home sellers. As a result of the changes made to the tax code, the National Association of Realtors now projects slower growth for home prices in 2018, with an appreciation rate of 1% to 3%. By doubling the standard deduction, Congress has significantly reduced the value of mortgage interest and property deductions as tax incentives for homeownership. On the bright side, no changes were made in the rules surrounding capital gains for home sales, which is good news for home sellers.
When you put all three of these trends together, two big conclusions emerge.
First, now is a very favorable moment for home sellers, thanks to the shortage in the market, the many eager buyers, and the high and rising prices. On the other hand, higher cost, higher tax areas will likely see prices decline as the result of new restrictions on mortgage interest and state and local taxes.
If you are looking to take advantage of the present moment to sell your home, please reach out by giving us a call or sending us an email. We look forward to hearing from you soon.