Several months ago sellers, buyers, and realtors were startled to learn that just over 66% of properties sold in the Miami area were bought for cash over the last year. So we were even more amazed when a similar figure was adduced for the entire state.
No wonder mortgage buyers of Boca Raton homes are frustrated. Two thirds of Boca homes, on average, are being paid for in cash. This is in an area where the average single family home sells for almost $900,000. As a result, sellers are ecstatic and reluctant to relent on price. The average concession was just over 6%.
A large number of these cash sales are Boca Raton condos. The average price of a condo in Boca Raton has increased from around $245,000 last year at this time to around $265,000 today. Sales of Boca condos are up almost 8% from a year ago at this time, even though there are about 5% fewer condos on the market than there were a year ago.
The familiar bad news.
What all those numbers add up to is that first-time homebuyers in Boca Raton, the majority of whom are coming with a mortgage, are currently consigned to 33% chance of being able to purchase the Boca home of their dreams.
It’s not just the cash competition. With tighter mortgage regulations and increasing mortgage rates, those dreams may also move further out of reach.
The higher the rate, the less house that new buyers can purchase. For example, a one point jump in a mortgage on a $400,000 house – from 3.5% to 4.5% – means an increase of more than $325 per month in payments. This rate rise may serve to slow the pace of price increases; it may also serve to discourage homeowners who were on the verge of selling, especially those who were finally emerging from an underwater financial state.
The increasing good news.
However, to counteract the unfortunate news about high numbers of cash buyers, higher prices and higher mortgage rates, there is some late-breaking good news for homebuyers: there are approximately 20% more Boca Raton homes for sale today than there were a year ago.
This increased competition means Boca Raton home sellers may soon have to think about holding the line on price increases and even making a few concessions in their list prices, and this is more positive news for Boca home buyers.
Marc Jablon, the Jablon Team
Re/Max Complete Solutions