CLOSING THE AFFORDABILITY GAP

Today's hot news: The US needs 4.3M new homes to close the affordability gap!

Hi everybody, Joe Hillner with Your Home Sold Guaranteed Realty, where we guarantee the sale of your home or I'll buy it!

I share market data weekly to keep you informed about the local real estate market.

Here is this week’s Boca Market Watch.

Single Family Homes

This past week, 60 new listings, that's not too bad, and ranging in price from $360K to $8.97M! 16 homes back on the market, while 58 homes listed took a price decrease, and 2 sellers raised their asking price. And another down week, with 34 different properties under contract, and 23 going pending. 18 homes were unsuccessful in selling and were taken off the market or the listing expired outright. And a worse week with 44 homes sold, ranging from $415K to $7.2M!

Condos and Townhomes

68 new listings, that's ok, and ranging from $120 Grand to $3.2 Million! 16 units came back on the market, 52 properties with a price decrease, and 8 sellers with an increase. And a decent week with 54 different properties under contract, and 39 going pending! 17 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired. Only 44 closed sales this week, way down from last week, and ranging in price from $102K to $4.2M. America would need to add 4.3 million homes to end its housing affordability crisis, according to a report from Zillow.

During 2021, there were 8 million “missing households” across the country — families without homes of their own — compared to just 3.7 million housing units available for rent or sale, adding up to a deficit of 4.3 million homes, according to the report.

“The U.S. housing market is like a high-stakes version of the game musical chairs,” said a senior economist at Zillow.

The report notes that for each of the 3.7 million housing units available for rent or sale across the country in 2021, there were more than two potential households — families in need of a home who may be “doubling up” in someone else’s home. This means if every missing household was willing and able to move into their own home, 4.3 million households would still be without a place of their own.

More than two-thirds of families doubling up are of low income, earning $35,000 a year or less, illustrating the deep need for more affordable housing units.

Housing inventory has only continued to empty out since 2021, with the housing market now sitting at a standstill. Over 90 percent of homeowners with mortgages have a rate below 6 percent, while more than 80 percent enjoy a rate below 5 percent. The average 30-year fixed mortgage rate was 6.43 percent in May, up from 5.23 a year earlier and the record low of 2.65 percent seen in early 2021.

Much of the blame for the current inventory shortage can also be placed on the decline of housing construction relative to the growth of the U.S. economy since all the way back in the 1960s! That's due in part to land-use restrictions, building approval delays and poor construction sector growth, all contributing to a lack of new home construction.

Experts are nearly unanimous in agreement about the need to loosen restrictive zoning laws to allow for more housing construction, and point to research finding that four out of five adults support allowing more, smaller-home types to be built in their own neighborhoods.

Folks, if this doesn't get addressed, and soon, the long term consequences will be socio and economic catastrophe - higher crime rates, increased mortality rates, declining literacy rates and a further widening of the political schism in our country.

In related news, the May market stats are in and it's kind of a mixed bag. In Boca, single family home sales were down 18% vs a year ago, while prices were up 5.5%. The avg price of a home in Boca right now is just a touch over $1.3M. Inventory continues to be the story. Our supply is up 37% from last year, but that's not necessarily good news. We still only have just over a 3 month supply of homes, about half of what we need for a balanced market.

And in the condo market, sales were down 19% from a year ago, and prices have slipped about 6%. Like single family homes, we have only a 3 month supply of condos and townhomes for sale, not nearly enough to sustain a healthy market.

So where do we go from here? As long as interest rates stay where they are, or even increase a little, the millions of homeowners who are rate locked into their homes will stay put, and builders won't be able to produce a fraction of the homes we need to meet demand. It looks like we're in for a long stagnant real estate market into the forseeable future...