Looking at the current statistics from the MLS, which run through January, it appears that Boca Raton home prices are unlikely to be highly affected by minor mortgage rate revisions. Even though listings are up almost since January of 2013, the total number of homes that are actively listed has dropped from 3459 down to 2792, which is a 12.6% reduction.
So while listings are up, so are sales, and homes in Boca Raton are moving off the market roughly at the same pace as last year—we’ve gone from an average of 94 to 98 days on the market.
Boca Raton Home Median Prices up since December
Yet, despite mortgage rate fluctuations, and despite the fact that the market absorption rate is down to just a fraction over 6 months, the median list price on a home in Boca Raton has moved from $280,000 to $300,00—that increase is just from December to January — and average list prices have moved up 8% since last year from $658,000 to $773,000.
This is significant because market equilibrium supposed occurs at a 6 month inventory supply. At that point, neither buyer nor seller should have any particular financial advantage –and that is when buyers expect to see the opportunity for some real negotiation on home prices in Boca Raton.
Seller concessions have increased.
We are seeing some of that already. The current average selling price of homes in Boca Raton is 92.5% of asking price. So, on average, sellers are conceding 7.5% of the asking price. Last year at this time, there were bidding wars on homes in Boca, and large numbers were selling for cash at list price.
This is a definite improvement as far as buyers are concerned. It is also a bit of a wake-up for sellers who often kick up their asking prices too high just because the home next door sold at a sensible market price.
Home prices still 31% below 2006 averages
However, despite those possible concessions, we are not seeing in any kind of drop in Boca home prices. It appears that we’re going to see a slow, steady price rise of anywhere from 3.5 – 5% over the course of this year; but nothing like the
The price of Boca Raton homes have always been buoyed by its highly rated school district. However we should also note, as does Kiplinger Personal Finance, that the price of homes, on average, remains 31.5% below their apex in 2006. In addition, families are spending, on average, about 15.6% of their incomes to pay a mortgage. Back in the heyday of home prices, 2006, families were taking out mortgages that consumed 23.5% of their incomes.
Mortgages requirements expected to loosen
There is also speculation among economists that as banks start looking for more income to offset the losses sustained during the housing bust, they may loosen the financial straitjacket in which mortgage loans have been wrapped, according to Mortgage Tracker. So sellers of homes can expect to see more buyers with sufficient loan resources.
This will encourage more sellers to come into the market, helping to maintain equilibrium and keep prices on an even keel.
This scenario suggests that Boca home prices will remain strong because of continued demand and greater ability of buyers to obtain mortgages.
Marc Jablon, the Jablon Team
Re/Max Complete Solutions