How long would it take a renter to save up for a down payment in today’s market?  A lot longer than you may think...

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  good week with 65 new homes on the market, ranging from $135,000 to $12.5 Million. 15 homes back on the market, while 39 homes listed took a price decrease, and 5 sellers raised their asking price.  And  a light week with only 46 different properties under contract, and another 32 going pending, probably due to a lot of people away on vacation.  And 18 homes were unsuccessful in selling and were taken off the market or the listing expired outright, not many.  74 homes were sold in the past week, a good week and those sales ranged from $208K to $6.8M. 

Next up, Condos and Townhomes:

Only 79 new listings, not terrible, and ranging from $79 Grand to $2.95 Million.  
20 units came back on the market, 32 properties with a price decrease, and 5 sellers with an increase, not very many at all.  67 different properties went under contract, and another 33 went pending, a decent week. And only 20 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired, still extremely few!  88 closed sales this week, a down week for condos, and ranging in price from $55 Grand to $3.3 M!

Here's what's making news right now.

According to a new report from Zillow, It could take area renters more than eight years to save for a down payment in today’s market, and that’s no surprise, as starter-home prices are growing almost seven times faster than renter incomes!  In our metro area, it would take an average renter saving 10% of their income, 8.3 years to save enough for a 20% down payment on a typical starter home worth about $200K.

Zillow economic data analyst Nicole Bachaud says first-time homebuyers face more challenges in coming up with a down payment without having equity from a previous home sale. 

She said, “In a housing market where prices are rising at record rates, especially when compared to renter incomes, the ever-increasing sum of a 20% down payment can feel out of reach,” she said in the press release. “The good news is that buyers who want to take advantage of today’s low mortgage rates can do so without putting a full 20% down — most conventional mortgages allow as little as 3% to 5%. That lower upfront payment comes with higher monthly payments, but the opportunity to build equity can outweigh those extra costs for many.”
The challenge facing those first time buyers is that they're up against competing buyers, many of whom have cash.  So if one is using an average agent, who sells only 1 or 2 homes a year, that buyer has a 1 in 12 chance of securing a contract on a property - not very good odds, and likely to be a serious source of stress and frustration over time.  Better to use an experienced agent with a system and a proven track record of success, like our VIP Buyer Program where we win 50% of the deals in a multiple offer situation.

In other news, Redfin is reporting that the number of buyers who locked in rates for a second-home mortgage was down 11 percent year over year in June — the first such decline recorded since the earliest weeks of the pandemic. The big second-home boom we’ve seen over the last year is abating, and that may partly be a result of tighter lending standards enforced by the federal government.

By early May, both Fannie Mae and Freddie Mac had implemented tighter limits on certain riskier loan types, including mortgages for second homes and investment properties. The return to working in the office, along with soaring prices and tighter lending standards for second homes, is shifting homebuyer demand in favor of primary residences.  And since we live in vacation home central, that could have a depressing effect on our local market.  We'll just have to see how that shakes out over the next 6-12 months.