Today's Hot Headline Real Estate inventory insanity!

Hi everybody,  It’s Joe Hillner with Your Home Sold Guaranteed Realty, where we guarantee the sale of your home, or I’LL buy it! 
Ok, so every week, I share market data to keep you informed with the local real estate market.  Here is this week’s Boca Market Watch.

First, Single Family Homes:

This past week, a  decent week with 59 new homes on the market, ranging from $229,000 to  $12.9 Mil! Only 18 homes back on the market, while 19 homes listed took a price decrease, and 9 sellers raised their asking price; in total, pretty few. 63 different properties went under contract, and 41 went pending, an average week, but that's because there's so little available! 

And 25 homes were unsuccessful in selling and were taken off the market or the listing expired outright.   58 homes were sold in the past week, a middling week, and those home sales ranged from $198K to $12.1M, cash! 

Here are the stats for Condos and Townhomes:

68 new listings, a down week, and ranging from $79 Grand to $6 Million.  
18 units came back on the market, 39 properties with a price decrease, and 16 sellers with an increase.  80 different properties went under contract, and 70 went pending - that's a huge week for condos!  And 32 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired - like single family homes, very few.  Only 63 closed sales this week, a light week, and ranging in price from $90 Grand to $4.5 M!

Here's what's making news right now.

 Inventory in our area has dropped to just 2 weeks of supply - the lowest I've ever seen it in 22 years of business!  Why aren't there any homes to sell?  And why has the problem gotten so bad?
The first reason is a drastic shortfall in new construction.  This predates the pandemic and has its roots in the Great Recession of 2007-2008. Builders had a hard time financing their projects and they found much less demand for the product they were making. Over time, other challenges arose.  The industry relies heavily on migrant and itinerant workers.  Many of them returned to their homes countries or found jobs in other industries. So there is a significant labor shortage preventing builders from expanding. And their supply costs have gone way up, especially lumber, in some cases the costs are double what they were just a couple of years ago.  And in our area, there is very little land left to build on. Most of the new construction is infill, rather than large developments.
And on top of this severe under-building of homes, you have the demographic shift of millions of Millenials coming into their peak home buying age, along with the uptick in demand caused by the pandemic.  So you've got a drastic shortage in inventory and demand that increased exponentially.

But that's not the end of the story.  As interest rates dropped, it helped fuel the buying spree that people have been on.  But institutional investors weren't thrilled.  They didn't love the fact that their portfolios were partially dependent on bonds that were paying next to nothing.  So in the last couple of years, they have been looking at real estate as an asset class.  And they have been buying homes in the hundreds of thousands, that's right.  If you're a buyer, not only are you competing with other people that want to live in the property, but now you're also up against iBuyers like Zillow and Opendoor, hedge funds, rental companies like Invitation Homes, pension funds and investor flippers - and they all have CASH!  There isn't a day that goes by that I don't get a call from someone looking to flip homes in FL.  The institutional investors see real estate as a great hedge against inflation.  The individual investors see a quick profit.  And collectively, they are grabbing approximately 25% of the few homes available, making it even worse for everyone else.

So how are we going to get out of this crunch? The easy answer is build more.  But that will take time, and again, we don't have much land to build on around here.  Which means whatever does get built will be even more expensive.  That's not going to help us with the affordability issue.  And labor costs to builders are massive - nobody is going to vocational school to be an electrician, carpenter or plumber, which adds even more to the cost of a new home.  Nationally, the estimates are that we are 1.5 million new homes short of where we need to be.  In Boca, we have 300 homes available but we need 3000, today. Where are they going to come from?
We need to convince more sellers to list their homes. What we are hoping is that the rollout of the vaccine, the continued rise in prices and the aging of the baby boomers will bring more sellers off the sidelines.  That being said, this housing supply shortage will probably be with us for at least a couple of more years.  Oh boy

By the way, if you're considering selling, you might be interested to learn about our Guaranteed Sale Program where we guarantee you at least 101% of market value, or I pay you the difference.

 If you'd like to hear more about this amazing program, just reach out to us at 561-609-0657.