Overall, the real estate market in Palm Beach has grown in bounds in the last decade, setting the median cost price of a home within the boundaries of $535,500. This growth is no doubt a result of the low mortgage rate, low tax burdens, high rate of demand, and limited supply of houses within the county.
However, while the general market has been doing great, the same cannot be said for the foreclosure market. Foreclosure rates have generally been dropping nationally, and consequently, there has been reduced activity in the foreclosure auction sphere.
Now, this might only be a fluke, and a closer look at the market is necessary. So, what has been going on in the Palm Beach foreclosure market within the last few years, and what should real estate enthusiasts interested in foreclosure auctions expect in 2022?
Due to the devastating market crisis caused by a recession, the years 2015 and 2017 both saw a steady decline in the rate of foreclosures. In 2015 alone, the average rate of foreclosures in Florida fell by 15% from the previous year with only 1 in every 87 homes facing foreclosure, and Palm Beach homes accounted for a large percentage of this.
However, in 2018, there was a spike of about 29% in Lauderdale - Miami and West Palm Beach which continued into 2019. By the year 2020, the rate of foreclosures in Palm Beach had again dropped drastically despite the recession ushered in by Coronavirus. This was a result of the forbearance plans and foreclosure moratorium extension set up by the Federal Housing Administration (FHA).
2021 saw a lot of negative predictions regarding the rate of foreclosure auctions in Palm Beach. Experts predicted a surge in foreclosure listings due to the expiration of the foreclosure moratorium set up by the government. However, 2021 recorded the lowest rate in recent years, majorly due to government intervention and the increased demand for housing during the Corona Virus pandemic.
This growth in the real estate market caused an increase in the prices of properties, allowing homeowners to amass significant equity on their properties, and the ability to sell these properties instead of having them taken away.
The decline in Palm Beach foreclosures, particularly in recent years can be attributed to a range of factors including economic and personal factors:
In March 2022, Palm Beach recorded an all-time low unemployment rate of 2.6% when compared to 4.9% last year. There is no doubt that this is because a lot of businesses and investors have been attracted to the county due to its favorable environment and regulations that support business growth. As a result, there are jobs available implying sufficient cash flow so that residents are less likely to default on mortgages.
Florida imposes no income tax on personal income, and thus, there is a lower tax burden on its residents. This extra income can play a major role in allowing residents to meet up with property payments. Also, this has increased the relocation of people and businesses from states with higher tax burdens to Florida and its counties, Palm Beach included.
It is no secret that there is a limited supply of property to meet the growing population in Palm Beach. Palm Beach is the 4th biggest county in Florida with a recent increase of 0.91% in the population.
As a result of this, properties listed are quickly bought within an average of 13 days from the time of listing. This promotes competition between buyers, with houses selling up to $100,000 above the selling price.
Any buyer willing to pay up to $100,000 over the listing price would likely be more than prepared to cover their mortgage fees and would be less likely to experience foreclosure.
Palm Beach is a popular destination that attracts thousands of tourists yearly. The real estate market is highly competitive as buyers try to outdo themselves to acquire one of the coveted homes with beachside views.
This typically involves buyers who have carried out their due diligence with respect to what they would be incurring in the way of property payments. As a result, foreclosures are less likely with said buyers.
Early 2022 saw an overall increase in foreclosure rates in the United States, with Florida ranking second despite the fast-growing real estate market. In Palm Beach, an increase of 1% was recorded between January and February 2022.
Experts believe that this is a correction taking place to reverse the effects of interventions set to protect homeowners during the Corona Virus pandemic. Also, this implies that foreclosure auctions are likely to be on the rise soon. So, what are the factors causing this reversal?
With the forbearance and moratorium plans set up by the government to ameliorate the effects of COVID on the real estate market, many foreclosure listings and auctions were held off. This allowed distressed homeowners to benefit from the booming real estate.
However, with the expiration of these interventions, homeowners who are still not able to meet up with their mortgage payments would have their properties foreclosed on and likely listed to be auctioned.
Due to the COVID restrictions and economic meltdown, some homeowners were put out of their jobs. Palm Beach is a well-known tourist location too, but due to the travel restrictions, tourists activities have dropped and jobs have been lost. As a result, affected owners may have to relinquish their properties as they can not keep up with mortgage payments.
Though Florida ranks high on the list of states with the highest foreclosure rate, foreclosure auctions have dropped drastically in the last 5 years. This is mainly because of the growth in the market and the high demand for property.
Palm Beach is currently a hot spot for real estate investment with 2021 seeing a whopping 22% leap in the median price of houses. Not only is Palm Beach’s environment beautiful, but Palm Beach is one of the safest places to live in the world. This attracts investors and companies to set up a base for business. So, yes, investing in the Palm Beach real estate market is a good idea.
Palm Beach's real estate market has shown positive growth over the years and does not seem to be slowing down. This is due to its strong economy, safe and scenic environment as well as favorable government policies regulating real estate. However, there has been a recent increase in the rate of foreclosures in Palm Beach within the first quarter, and it could possibly increase through the year.
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