Today's hot news:   Is the RE Market shift we've been anticipating finally here?

Hi everybody, Joe Hillner with Your Home Sold Guaranteed Realty, where we guarantee your home will sell for 101% of asking price or we'll pay you the difference! 

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:

87 new listings, very nice, and ranging in price from $400K to $40M, holy guacamole!  17 homes back on the market, while 48 homes listed took a price decrease, we're seeing that number go up every week now, and 7 sellers raised their asking price.  And  a very light week with 33 different properties under contract, and just 20 going pending.  27 homes were unsuccessful in selling and were taken off the market or the listing expired outright.  And a better week for sales with 72 homes closed in the past week,  ranging from $340K to $4.2M!

Next up, Condos and Townhomes:

88 new listings, very good, and ranging from $100 Grand to $2.85 Million.  19 units came back on the market, 34 properties with a price decrease, and 20 sellers with an increase.  And a poor week with 33 different properties under contract, and 30 going pending,  And 17 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired. 66 closed sales this week, not great, and ranging in price from $100 K to $8.3M.

Here's what's making news right now.

The RE Market is turning, right?  In an Op/Ed piece for Inman, David Walker says that there are 3 key metrics that everyone in real estate needs to understand, but no one seems to be talking about.  While 2021 and the first part of 2022 were the strongest market we've experienced in decades, if ever, the media is still talking about the future in very negative terms.

So what's the reality? Mortgage rates are rising, housing prices are still climbing, and a lack of new inventory continues. And what does that presage?

Walker says that the following market technicals paint a rosier long term picture than what you're probably reading about.

First, homeownership rates are in line with the historical average of 65% dating back to 1965 and below the 69.2% peak of 2004. This tells us that homeownership rates are still low relative to the mid-2000s and earlier periods. Homeownership rates reached a low in the mid-2010s as a result of the lingering effects of the 2008 Great Recession and the rise of urban living.

It’s true that housing prices and lack of inventory have put downward pressure on homeownership rates, but the key here is that the numbers have room to rise. There seems to be a public perception that homeownership rates have exploded, which implies that they are unsustainably high.  But that couldn't be further from the truth.  We are right at the historical avg and well under the 69% high, so plenty of room for growth.

Second, and as I've often reported, he U.S. has underbuilt single-family housing by 4.3 million units since 2000, relative to new household formations, causing a critical shortage. People are forming households faster than builders are creating new housing, which is causing a fundamental shortage of available single-family housing across the country.  And that's certainly true in our area, with no land left to build on.

Between 2015 and 2020, the average rate of household formation was 1.5 million households per year, while the average rate of single-family home completion was 806,000 homes per year. If new home construction and household formations were to continue at this clip, the gap between these metrics would never close. If the rate of home completions doubled to an average rate of 1.6 million home completions per year, it would still take more than 20 years to close the existing gap. In short, we will live in a heavy demand and supply-starved market for the next 10-plus years.

And third, Mortgage originations are going to buyers with high credit scores, and those buyers can afford their mortgages.

Unlike in 2008, today’s borrowers can afford their loans. Over 70 percent of mortgage dollars are going to consumers with 760 or higher credit scores, in contrast to pre-2008, when that number was under 25 percent.  And they have skin in the game - the majority made a large down payment as part of their transaction.

So if you're worried that we might be facing another market crash precipitated by mortgage failures and foreclosures, it's just not going to happen.  Our RE Market is healthy, and it's actually a great time to buy or to sell!