Just yesterday, a customer asked about listing her Boca Raton home for sale. Naturally, her first question was, “How much can I get for my home?” But the second question was more important: “How are home sales doing?”
Had she asked me that a couple of months ago, I would have told her that Boca home prices are rising around 1.5% per month, and sales appear to be unstoppable. However, today I am seeing some price resistance and a slight slowing in demand.
Demand remains strong, even as listings increase.
This does not mean homes in Boca Raton have fallen out of favor. On the contrary, the demand for homes remains strong. However, buyers are not willing to pay full price immediately. We are seeing some negotiation and, more important, we are seeing a slight uptick, around 6% per month, in the number of listings on the market.
Currently, according to the National Association of Realtors (NAR), the inventory of unsold homes on a national basis stands at a 5 month supply. Market equilibrium is considered to be a 6 month supply. At that point, when supply equals demand we move away from concept of “seller’s market” into a market that allows for some negotiation.
More time on market for homes.
In addition the NAR says that fewer home sale contracts were signed in August. This marks the third straight month of declivity in the pending home sales index.
We are also seeing an increase in the time homes remain on the market. The median number of days on market (DOM) in September was 50 days. While this is an increase from a low of 43 days in August, it’s still lower than the70 days on market we saw last year at this time.
Mortgage rates changes influence demand.
Much of this change is due to increased mortgage rate fluctuations. As mortgage rates increase, affordability drops. If prices also rise, fewer buyers are available. Nonetheless, there is no cause for alarm in the housing market. While sales dropped approximately 2% from August to September, this year’s sales figures were still almost 11% higher than those of a year ago at this time.
Also, because our government once again appears to be functioning, mortgage rates have dipped back into a range below 4.5%. Boca home prices, along with prices of homes all over Palm Beach County continue to rise, albeit more slowly.
Marc Jablon, the Jablon Team
Re/Max Complete Solutions