Today's big news: Homebuyer sentiment hits a record low.

Hi everybody, Joe Hillner with Your Home Sold Guaranteed Realty, where we guarantee you a cash offer on your home within 24 hours! 

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:

59 new listings, pretty good, and ranging in price from $450K to $11.25M.  
19 homes back on the market, while 19 homes listed took a price decrease, and 5 sellers raised their asking price.  And  another light week with 42 different properties under contract, and 28 going pending.  22 homes were unsuccessful in selling and were taken off the market or the listing expired outright.  And another decent week for sales with 64 homes closed in the past week,  ranging from $380K to $7M!

Next up, Condos and Townhomes:

79 new listings, pretty good, and ranging from $90  Grand to $15.5 Million.  
16 units came back on the market, 16 properties with a price decrease, and 2 sellers with an increase.  And another strong week with 45 different properties under contract, and 60 going pending,  And like the last couple of weeks, only 17 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired. 90 closed sales this week, that's a good week, and ranging in price from $100 K to $9.4M.

Here's what's making news right now.

High home prices, increasing home loan rates and economic uncertainty means that just 24% of shoppers believe it's a great time to purchase a home - the lowest reading ever recorded in a monthly survey conducted by Fannie Mae since back in 2010.

Fannie Mae's most recent National Housing Survey, conducted last month, also found 73% of Americans think the economy is off course, and that a survey high 25% of consumers anticipate that their financial situations will deteriorate over the next 12 months.  That's pretty sobering.

Obviously, if this consumer pessimism persists, the effects could ripple through real estate markets and depress sales more seriously than recently forecast. In a March 10 forecast, Fannie Mae economists anticipated that home sales will dip by 4.1 percent this year, to 6.6 million units, with a projected 12.3 percent growth in new home sales outweighed by an expected 6.1 percent drop in sales of existing homes.

This flagging consumer sentiment, along with the run-up in mortgage rates, up a full point in just the last month, will likely diminish mortgage demand from move-up buyers – and fewer move-up buyers means fewer available entry-level homes, adding to the already significant challenges for first-time homebuyers.  FNMA's Chief Economist Mark Palim said in a statement. “If consumer pessimism toward homebuying conditions continues and the recent mortgage rate increases are sustained, then we expect to see an even greater cooling of the housing market than previously forecast.”  Could this be the beginning of the tipover into a buyer's market?

Fannie Mae's Home Purchase Sentiment Index (HPSI), which depends on six survey questions, decreased by 2.1 points in March, to 73.2. and it's down 8.5 points compared to the similar time a year ago.

The reduction in the Index was attributed to decreases in consumer sentiment about purchasing conditions, job loss concerns, home price outlook, and mortgage rate outlook. Buyer sentiment improved in only two areas - selling conditions and change in family income.

While market conditions are seen as challenging for buyers, that’s a good thing for those looking to sell, survey respondents said, with 74 percent saying it’s a good time to sell. No surprise there, right?  I'm kind of surprised that number isn't higher to be honest.

The share of consumers who say the economy is on the wrong track rose 5 percentage points in March, to 73 percent. The share who say it is on the right track fell 3 percentage points, to 21 percent.  Anecdotally, I hear that from people all the time, regardless of politics.  There's a lot of dissatisfaction out there, and I'm getting clients relocating from CA, MI, and NE, on top of the usual suspects from the Northeast.

Only 4 percent of consumers surveyed in March expected mortgage rates would go down in the next 12 months — a thesis that’s proved correct so far, with mortgage rates surging past 5 percent this week. With 69 percent expecting mortgage rates to go up and 23 percent saying they’ll stay the same, the net share of Americans who say mortgage rates will go down over the next 12 months decreased to just 4%.  Looks like the days of cheap money are behind us into the forseeable future.

While most consumers (57 percent) still think it would be easy to get a mortgage, the share of those who say it would be difficult increased 3 percentage points in March, to 41 percent.  As rates go up, it gets more difficult to qualify because the monthly payment may push your debt to income ratio over the limits.

While most Americans don’t think it’s a good time to buy a home, 66 percent of those surveyed said that if they had to move, they would buy a home rather than rent. Interesting, right?  Well, that potential mortgage payment just got a little pricier.  For example, if you're a first time buyer and looking to borrow $400K, a month ago, your payment would have been $1796 a month; that same loan is now going to cost you $2147, an increase of $351 a month.  That's like another car payment, ouch!

So what's the takeaway?  Consumer sentiment, as it coheses, can become a self fulfilling prophecy and that could have a significant and depressing effect on the real estate market.  So if the buyer demand starts to dry up, the white hot seller's market could evaporate right along with it.  We'll just have to see how it plays out..