Real Estate – Where is it Heading?
The COVID-19 pandemic has led to significant changes in the real estate market, both for the good and for the bad. Over the past few months we have witnessed strong demand in certain sectors like luxury residential homes (outside of dense urban cities) as well as significant weakness in the retail and hospitality sectors.
Where things progress from here is challenging to forecast due to uncertainties with the economy and the political climate as well as the impact from the pandemic. However, certain markets (South Florida being one of them) are starting to see signs of a recovery in most sectors.
Commercial Real Estate
- Commercial real estate sales transactions are down 68% year-over-year as of June 2020 (transactions over $2.5 million).
- As of July 2020, commercial property values are down by 10% year-over-year.
- The CMBS delinquency rate declined from 10.3% to 9.6% in July. Delinquency rates in hospitality (23.8%) and retail (16.1%) were the highest among all property sectors.
- Construction spending declined by 3.5% during the month of June.
- The acceleration of e-commerce is leading to increased demand for warehousing and industrial space.
Significant Commercial Property Transactions – Palm Beach County
Continuing on the momentum from 2019, commercial property transactions in the northern Palm Beaches have been extraordinary strong since the start of the COVID pandemic. Following are several of the local area featured transactions.
- Divosta Towers, Palm Beach Gardens: reported to be under contract for $83 million or $375 psf.
- Former Grand Bank Center, Palm Beach Gardens: $15 million or $319 psf.
- Waterway Cafe, Palm Beach Gardens: $12.5 million or $1,481 psf.
- Golden Bear Plaza, North Palm Beach: approximately $49.8 million or $204 psf
- Gardens Medical Pavilion, Palm Beach Gardens: $24.3 million or $322 psf
The Residential Housing Market – July 2020
Nationally the housing market was very strong during the month of July with existing-home sales improving by 24.7% from June 2020. Existing home sales as a whole rose year-over-year by 8.7% with a national median price increasing to $304,100 (8.5%)
The South Florida (Palm Beach, Broward and Miami-Dade counties) housing market has started its recovery as the number of closed single-family sale transactions improved by 2.2% year-over-year. It should be noted, however, that overall sale volume was up by 18.3% to $3.1 billion, driven largely by a 15.7% increase in the average sale transaction. Although year-to-date single-family transactions still lag by 12.5% as compared to the same period in 2019, pending inventory is up by more than 20% (year-over-year) as the housing market continues to improve. There is one significant weakness which could impact the market in the coming month. Inventory levels are at very low levels and are down by more than 30% from the same period in 2019. At the current sale velocity, there is only a 3.6 month supply of inventory in the market.
Palm Beach County was the best performing market in South Florida during the month of July 2020 with closed single-family home sales up by 9.4% (year-over-year), with dollar volume up by almost 40% to $1.4 billion, driven largely by multi-million dollar luxury transactions. Single-family transactions over $1 million are up by more than 100% year-over-year. The average single-family sale price in Palm Beach County during the month of July was a staggering $737,848, up 27.5% year-over-year (the median price is $399,320, up 12.5%).
Following is a summary of the year-over-year market changes of single-family closed sale transactions from July 2020 on our featured local area communities.
- >Boca Raton: sale transactions up by 2.6%, dollar volume up by 24.1%
- Coral Springs: sale transactions down by 22%, dollar volume down by 16.5%
- Fort Lauderdale: sale transactions down by 7.3%, dollar volume up by 1.5%
- Jupiter: sale transactions up by 9.6%, dollar volume up by 80.2%
- North Palm Beach: sale transactions up by 116.7%, dollar volume up by 308.4%
- Palm Beach: sale transactions up by 116.7%, dollar volume up by 46.3%
- Palm Beach Gardens: sale transactions down by 39.8%, dollar volume up by 53.5%
- Palm City: sale transactions up by 76.9%, dollar volume up by 102.7%
- Plantation: sale transactions similar to July 2019, dollar volume down by 13.3%
- Stuart: sale transactions up by 25.6%, dollar volume up by 17%
- Wellington: sale transactions up by 3.8%, dollar volume up by 29.9%
- West Palm Beach: sale transactions down by 22.2%, dollar volume up by 46.3%
About Quantum Realty Advisors, Inc.
Quantum Realty Advisors, Inc. is a family-owned, independent real estate brokerage and advisory firm that provides premium quality real estate services not only to traditional home buyers and sellers, but to business enterprises, trust and estate managers, asset management firms and several of the world’s best know financial institutions.
We committed to changing your expectations of a real estate professional and have one simple principle: TO DO WHAT’S RIGHT BY OUR CLIENTS AND STRATEGIC PARTNERS. With this principle in mind, we are creating a better client experience, providing the kind of service you may have thought did not exist in the real estate industry.
Contact us at 561.584.8555 or via email at email@example.com.
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