It's not a real estate bubble, unless it pops!  What does 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 54 new homes on the market, ranging from $275,000 to a couple of homes priced at $4.9 Million. Only 17 homes back on the market, virtually nothing, while 28 homes listed took a price decrease, and 6 sellers raised their asking price.  53 different properties went under contract, and 42 went pending, an average week. 
And 26 homes were unsuccessful in selling and were taken off the market or the listing expired outright, still on the low side!   100 homes were sold in the past week, a great week, and included my buyer Joshua - 24 yrs old and a first time buyer - for $1.3 M, how we doing?! 
 Those 100 sold homes ranged from $175K to a couple of homes just over $10M!

Next up, Condos and Townhomes:

Only 55 new listings, very low, and ranging from $82 Grand to $2.3 Million.  
30 units came back on the market, 29 properties with a price decrease, and 9 sellers with an increase, in total, not very many.  61 different properties went under contract, and 52 went pending, a decent week. And only 24 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired, very few!  85 closed sales this week, a pretty good week, and ranging in price from $62 Grand to $3.6 M!

Here's what's making news right now.

There's so much talk going around that we are in another real estate bubble and that prices are going to come down, if not crash.  Record home prices, bidding wars and other factors show a real estate market that appears eerily similar to the 2006 bubble market.   Although the big difference is that mortgage loans are much harder to get today than they were 15 years ago - Today, loans are proportionally smaller to house values and borrowers’ income, because Fannie Mae, Freddie Mac and the banks themselves have imposed stricter guidelines on lending; also, borrowers’ average credit scores are higher.  So we don't have the mortgage risk that is like a house of cards just waiting to topple over.  

And another real estate implosion seems unlikely, because of the tight housing supply and strong demand that is likely to persist.  I've reported previously that on a national scale, we are short millions of homes to meet current demand.  So even if demand cools off somewhat, we will still be in a seller's market.  

And the super low interest rates are part of that demand picture. The U.S. Federal Reserve has purchased nearly $1 trillion in mortgage-backed securities to keep the rates down since resuming its buying posture in March of 2020.  This week, the Fed released some guidance that indicates that they intend to start taking rate hikes sooner than expected; however, we're talking 2023 instead of 2024.

So is this a bubble?  A bubble, by definition, pops and then prices plummet. That scenario seems very unlikely in the forseeable future. But what does seem likely is that the housing price increases we have been seeing will probably start to cool off.  And maybe we're already seeing the early signs - mortgage applications, a leading indicator of the real estate market, were down sharply in May.  And as I shared with you last week, pending home sales, another leading indicator, were down in April.  The May pending home sales stats will be out next week, so that will be a metric I'll be looking at very closely.  Drum roll please...