With the economy stuck at 9.1% unemployment, you would expect that we would be a buyer’s market in Boston — and there would be an over supply of Boston condos for sale to choose from. Well, not so fast.
Last week, the National Association of Realtors announced that the number of listings in September dropped to a four-year low. Nationally, there were 2.19 million homes on the market, 20% less than the prior year and the smallest amount since they begun tracking such statistics in Jan. 2007.
It’s no different in many in the Boston market, where the inventory in many local metro areas haven’t increased. The exceptions are Dorchester and South Boston.
So, while it’s supposed to be a buyer’s market, there seems to be less and less to choose from. And the law of supply and demand in economics typically tells us that as supply decreases, prices go up. That appears to be the case here in Boston. (See blog post below.).
What I am hearing from potential Boston condo buyers and buyer broker agents is that potential buyers are very discouraged by condo pricing and existing inventory. And it’s not just in Boston.
Nick Timiraos at the Wall Street Journal wrote about the lack of quality homes, located in the right places and priced correctly. While wannabe homeowners are out there, the pickings are slim and not up to snuff.
The easiest explanation is that there may be too many homes for sale in the wrong places. During the housing boom, many homes were built in far-flung locales that aren’t as attractive today. Case in point look at the large supply of inventory in Dorchester.
Second, many homes listed for sale may be over-priced, exacerbating the challenge of declining inventory. Some sellers may be listing their homes at wildly unrealistic prices because they don’t want to have to sell their home in a short sale…
Third, short sales make up a large chunk of sales in many hard-hit markets, and some home buyers have steered clear of short sales because those deals can take months to complete. They’re also liable to fall through at the last second.
This makes sense. I’ve written a few times about condos in the Back Bay and on Beacon Hill that were snatched up in days after being listed – true case studies that show if the Boston condominium and the price are right, the demand is there.