These are my current predictions about Boca Raton home sales for 2014, based on market conditions at the moment. Because no one can foretell the future, please allow for changes as the year progresses.
As we start off the year, we see Boca Raton home prices rising but far more slowly. Monthly price increases should slacken to less than half a percent, and we may not see more than a 3-5% increase in Boca home prices over the course of the year.
Boca Raton home inventory is very slowly increasing
There are three reasons that I can see for this slowdown in appreciation. The first is that more homes in Boca Raton are coming into the market. Inventory is slowly creeping toward equilibrium (a six month supply, wherein neither Boca home buyers nor Boca home sellers will have much advantage) but we won’t hit that point until late this year. The National Association of Realtors (NAR) indicates that a dramatic appreciation in housing inventory is at least a year away.
So, even though housing inventory is approximately 5% higher than it was last year at this time, Boca sellers may still have a slight advantage for several months down the road. But not much, because higher inventory levels signal lower demand levels.
Mortgage rates are rising.
The second reason is that mortgage rates are expected to hit 5% or above this year and banks have put more stringent rules in place for mortgage qualification. Rates have already moved up to 4.48% from 3.34% a year ago. That means buyers of Boca homes will be able to afford less house than they could last year.
Buyers and sellers more attentive to recent sales.
The third and most important reason is that buyers – and now sellers – are looking more closely at appraised values of homes in Boca and / or comps in the neighborhood. As we approach equilibrium, sellers have come to understand that buyers no longer feel the need to engage in bidding wars.
If the first Boca home sellers won’t meet their reasonable offer, they will bid on another Boca home. Sellers, likewise, will see that they cannot hold out for too high a price because a neighboring Boca home – and there are a few more on the market each month — will sell more reasonably.
Marc Jablon, the Jablon Team
Re/Max Complete Solutions