Boca and surroundings’ booming housing market is a plus for sellers and real estate sales, expensive and slim pickings for buyers.
Below is commentary from PNC Bank’s Florida economist Abbey Omodunbi.
The National Association of Home Builders’ Housing Market Index showed “better prospective buyers’ traffic supported by very low mortgage rates and improving labor market,” among other factors. The trade association predicted residential housing will remain strong in 2021.
Q: Why are we coming out of a pandemic with such a hot housing market?
A: We had the recession last year and housing has been bright spot during the pandemic since March.
Q: Is that because this area is built out and there’s not enough property available?
A: Lack of inventory is one of the factors. Looking at Palm Beach County, more buyers are chasing fewer homes.
Q: Why is that?
A: There’s not enough land and we’ve seen an increase in the cost of homebuilding materials. The property margins are slimmer compared to two years ago.
Q: Large developers are still very active in the western suburbs here.
A: There’s a very strong demand, so there’s been an increase in demand for single family. Another factor is the work from home policy. People are tired of being cooped up in small spaces, which has increased the demand for single family.
Q: The housing market is so hot here in Boca, landlords are jumping in to sell and not giving renters much notice. Can they do that?
A: Month-to-month has to give 30 days notice. It may be different for long-term leases. But there’s a moratorium on evictions until June, so if applicable, they can look in those resources for their situations.
Q: This reminds me of the housing market in 2008. What are the differences?
A: Housing fundamentals are very solid. Mortgage rates are very low for a while. Consumer balance sheets were very solid. Lots of folks got stimulous checks passed by Congress and many didn’t have opportunities to spend the money on services like travel and theater. So debt as a percentage of income is low. Labor markets are improving. But lending standards are stricter.
Q: How long do you think this will last?
A: The pace of growth will slow in the next couple of years…In parts of east and west and some parts of Florida there’s not enough land, but in the suburbs were supplies are more elastic we will see more inventory.
By Marci Shatzman