New homes are priced outside the reach of the bulk of today’s first time home buyers. Lawrence Yun, chief economist of the National Association of Realtors spoke recently and gave two scenarios for the future of the real estate market. On the optimistic side, he pointed out that many drivers are likely to boost housing demand in the near future. “Since the recession, many consumers have seen their home equity rise, boosting their household wealth; seen an increase in job opportunities, and have repaired credit problems that arose during the recession.
That’s bolstered pent up demand, which in turn has pushed up closed and pending sales, at least on a national level.
They’re also behaving more conservatively in their spending.
“People are not doing cash-out refis,” Yun said. “They’re no longer using their homes as ATMs.”
But on the negative side, inventory shortages — including in Southwest Florida — have pushed up prices so high that the young people, burdened by student debt, are delaying marriage and homeownership.
Although they yearn to be homeowners, “they’re just not in the game yet,” he said.” (News Press, June 11, 2016)
I have been saying that the real estate market in Southwest Florida is spotty, if not slow. But in affordable housing, and by affordable I mean to say that the home price is in line with what the buyers can afford to pay, housed s no not languish on the market. They sell quickly, often with multiple offers. This price is based onwhat our target buyer family earns that gives them enough income to qualify for a mortgage loan on a typical home in our area. There is a wide disconnect here, this is affecting our market.
Of course in our area of Fort Myers, Cape Coral, Lehigh Acres and Naples we have many buyers that pay cash (still above 60% of our buyers) but more about that later on. Take a look at this calculator: Affordability Calculator. You can play with the numbers and see what you can afford or a typical buyer can afford. For example, a couple with an $80,000 income and $1000 in car and other payments and $20,000 down payment IN THEIR HANDS can afford a home of about $224,000. Not much home in our area, and new home choices are condos, and the price qualification has to consider condo fees so that $224,00 goes down.
Ask any real estate agent in town and they will tell you that any house on the market under $300,000 is looked at often and sold quickly.
Cash buyers are also squeezed, The return the retirees are getting on their retirement accounts (seewww.retirementnext.com) is low today and some future retirees are not only looking for smaller, cheaper housing but also looking for jobs) ( See encore careers)
I listed a home at $319,900 earlier this week. THREE DAYS later and as many showings had this home under contract.
Are we going to see $500,000 the new $300,000? Some experts say yes. I say yes but not very soon.
Affordability today is the key.