Interest rates dropped again! What's it all mean?

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 66 new homes on the market, ranging from $418,000 to  $25.9 Million - now that's a spicy meatball! Only 23 homes back on the market, while 18 homes listed took a price decrease, and 11 sellers raised their asking price. 65 different properties went under contract, and 38 went pending, a normal week. 
And 25 homes were unsuccessful in selling and were taken off the market or the listing expired outright.   62 homes were sold in the past week, an average week, and those home sales ranged from $165K to $9.75M.  

Next up, Condos and Townhomes:

78 new listings, not bad, and ranging from $70 Grand to $3.75 Million.  
17 units came back on the market, 43 properties with a price decrease, and 6 sellers with an increase.  84 different properties went under contract, and 66 went pending - another huge week for condos!  And just 24 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired - very few.  93 closed sales this week, a strong week, and ranging in price from $72 Grand to $2.4 M!

Here's what's making news right now.

Interest rates dropped for the third week in a row, to just below 3%.  That's the lowest they've been in a couple of months.  Consequently, mortgage applications were up 9% over the previous week, a clear sign that buyers were looking to take advantage of the additional purchase power.  Not only does it allow them to qualify for a higher priced home, but in the landscape that we're in, it allows them to bid much higher on a property when in competition with other buyers.  And that's exactly what they're doing - bidding prices way up over asking.
And here's how bad it's gotten.  New home sales are way up; nationally, we're at a 15 year high.  And that's despite the shortage of new homes even available.  But here's where it gets worse.  In the last year, as I've previously reported, builder costs have shot way up.  So if a new home is nearing completion, some builders are seeing their profit margins eroded, while at the same time, market prices have spiked.  In some cases, these builders are refusing to close on the sale unless the buyer is willing to renegotiate the deal, at a much higher price!  Clearly, the parties signed a contract, but what happens when one refuses to perform?  It ends up in the hands of the attorneys, of course.  This is a very recent development, so we'll have to see how things shake out and if any case law comes out of it.
But here's where it gets even crazier.  As we all know, multiple offer situations are the norm nowadays.  When you buy new construction ground up, the first thing you do is select your lot and then choose which of the builder's models will fit on it.  And you pay what's called a lot premium that's included in the overall  price of the home.  The market has gotten so bad, so competitive, we're now seeing multiple offers on just the lots now.  That's right, bidding wars for just the opportunity to buy a new home, and of course, they're having to pay substantially more than the nominal lot premium.  WOW!  Where will it all end?  And when?  That IS the question, isn't it.  Whenever things do shift, you'll hear about it first right here.

By the way, if you're considering selling, I recently got my hands on this report, 10 Questions to Ask Before You Hire an Agent.  And if you'd like to receive a free copy, just reach out to us at 561-609-0657 and we'll mail it right out.