The retreat of investors from South Florida’s housing market has left room for traditional homebuyers, but jacked-up prices, lack of inventory under $300,000 and lofty lending standards are still barriers to the American Dream.

Nationally, millennial buyers – people age 34 and younger – represented 32 percent of all purchases in the previous 12 months, according to a report this month from the National Association of Realtors.

But Palm Beach County Realtors say anecdotally they’re not seeing a rush of millennials or first-time homebuyers largely because of a housing price shift that rocketed off 2011’s bottom to a median of $273,750 in January.

Instead, move-up buyers looking for more space and retirees downsizing make up a good deal of Realtors’ clientele. Unless a first-time buyer is ready to handle a fixer-upper or townhome, they may be renting for the near future.

“Since prices are higher, it has made it more challenging for first-time buyers,” said Realtor Shannon Brink, of REMAX/Prestige Realty. “We’re back to $275,000 to $300,000 for the average house, and to some degree, the window for first-time buyers to get into a single-family home has closed.”

When prices bottomed out in late 2011, first-time buyers competed with cash-ready investors buying in bulk to feed a nascent industry of corporate-owned single-family rental homes. That competition increased prices while also taking lower-end inventory off the market.

At the same time, the economy was still in recovery mode and first-time buyers may have been less confident about their employment status, leaving some sitting on the fence, said Skip McDonough president of Jupiter-based Family Mortgage.

“There are certain things happening keeping millennials from being bigger,” said McDonough, who notes that the average mortgage he handles in Palm Beach County is $280,000, while the statewide average for his company is $180,000.

Nationally, homeownership among adults under the age of 35 is down to 36.8 percent, from a peak of 43 percent in 2004, according to Wells Fargo economists.

In Florida, the homeownership rate for people age 25 to 34 was 32 percent in 2013. Palm Beach County had a higher rate at 37 percent, according to the 2013 American Community Survey from the U.S. Census Bureau.

Lake Park residents Cori and Rick Maffett are millennials – both age 31 – and homeowners.

With two young daughters – one just three weeks old – the couple is in the market this year for a bigger home after their Lake Park property went under contract in one day at 6 percent above its list price.

They need three bedrooms, and are looking in the sought-after price range of under $300,000.

“The whole goal is just to create options at this point,” said Brett Boettge, a Realtor with Keller Williams who is representing the Maffetts.

The inventory of homes under $300,000 is increasing, but is still on the low end, Realtors said. In January, there were 545 single-family homes in Palm Beach County priced between $200,000 and $249,999. That’s a 30 percent increase from the same time last year.

The supply of homes priced between $250,000 and $299,999 was up 25 percent to 735, according to a January report by the Realtors Association of the Palm Beaches.

But buyers had to move fast. Homes with prices between $200,000 and $299,999 went under contract in a median of 48 days.

“I’m not really that nervous,” said a confident Cori Maffett, before looking at a home this month. “It’s a little pressure, but I think we’ll find something.”

After a whirlwind tour of nine homes in less than a week’s time, the Maffetts settled on a three-bedroom, two-bathroom property northeast of Northlake Boulevard that was listed at $289,000. While its back yard looks into a school parking lot, they’ll plant palm trees to block the view.

“We don’t want to move again anytime soon,” Cori said.

The high single-family home prices are driving some Palm Beach County buyers to townhomes and condominiums, which had a median sale price of $130,000 in January.

In the new West Palm Beach community of Charleston Commons by Lennar, townhomes start at $210,990 for 1,500 square feet. The most expensive units, which have 1,700 square feet and three to four bedrooms start at $247,990.

Sales started in late August. As of mid-month, 38 homes had sold or were under contract. The first phase of the development has 116 homes.

“People say they can find homes a little cheaper, but they need a lot of work,” said Luis Garcia, a new home consultant for Lennar who works with Charleston Commons buyers. “Here they get new stainless steel appliances, granite countertops, and can choose their own cabinet style.”

Buying a condominium can mean even cheaper prices for cash-strapped first-time buyers, but securing a loan can be difficult.

Condominiums that have too many units being rented aren’t eligible for loans backed by Fannie Mae and Freddie Mac unless a 20 percent down payment is provided.

“Pair that with a condo fee and that’s another way millennial buyers get priced out of the market,” said Brian Saver, a principal with McWilliams Ballard in West Palm Beach.

Nearly 69 percent of Palm Beach County condo and townhome sales in January were cash deals.

Despite the roadblocks to buying in South Florida, national studies show millennials don’t want to rent forever.

A 2014 generational survey by the National Association of Realtors said 39 percent of millennials who bought a home said the decision was driven by a desire to own a place of their own, as opposed to, for example, a job relocation or the birth of a child.

Source: The Palm Beach Post