The market’s direction will be determined by inventory, and Boston is in the top tier on Calculated Risk list for the biggest percentage drop year-over-year. Also consider how the Boston metro compares to others that had a similar number of new listings in April:
|Metro Area||April Listings||Metro Population||People Per New Listing|
|San Diego||3,513||3.3 million||939|
Our market is starved for inventory, so you really can’t blame sellers for pushing it, price-wise. Boston condo buyers may back off some, and not as many listings will sell. But when the success rate of listings-that-sell has been an unusually-high 80% to 90%, we can afford some additional failure.
We’re going to have fewer sales. Panic selling? Probably not.
I expect we will see further increases in inventory – and further decline in sales – in May due to higher mortgage rates
Buyers Want To Know: Why Is Housing Supply Still So Low?
One key question that’s top of mind for Boston condo buyers this year is: why is it so hard to find a afforable Boston condominium to buy? The truth is, we’re in the ultimate sellers’ market, so real estate is ultra-competitive for Boston condo buyers right now. The number of buyers searching for a home greatly outweighs how many homes are available for sale.
While low inventory in the Boston condo for sale market isn’t new, it’s a challenge that continues to grow over time. Here’s a look at two reasons why today’s housing supply is low and what that means for you.
The graph below shows new home construction for single-family homes over the past five decades, including the long-term average for housing units completed. Builders exceeded that average during the housing bubble (shown in red on the graph). The result was an oversupply of homes on the market, so home values declined. That was one of the factors that led to the housing crash back in 2008.
Since then, the level of new home construction has fallen off. For the last 13 straight years, builders haven’t been able to construct enough homes to meet the historical average (as illustrated in green on the graph). That underbuilding left us with a multi-year inventory deficit going into the pandemic.
Then, when the pandemic hit, it fueled a renewed appreciation and focus on the meaning of home. Having a safe space to live, work, school, and exercise became even more important for Americans throughout the country. So, as mortgage rates dropped to at or below 3%, buyers eagerly entered the market looking to capitalize on those low rates to secure a home that would fulfill their changing needs. At the same time, sellers hesitated to put their houses on the market as concerns about the pandemic mounted.
The result? The number of homes available for sale dropped even further. A recent article from realtor.com explains:
“Last month, the number of home listings dropped 26.8% compared with the same time a year earlier. This meant there were about 177,000 fewer homes listed in what’s already typically a slower month due to the holidays and colder weather. . . .”
For a buyer, low inventory can be a challenge. You want to find the home of your dreams, and you don’t want to settle. But what if there just aren’t that many homes to choose from?
There is some good news. Experts are projecting more homes will soon become available thanks to sellers re-entering the market. Danielle Hale, Chief Economist at realtor.com, shares this hope, but offers perspective:
“We expect that we’ll start to see a turnaround and inventory will stabilize and start to go up a little bit in 2022. . . . But that means we’re looking at inventory levels of roughly half of what we saw before the pandemic. For buyers, the market is likely to continue to move fast. If you see a home you like, you want to jump on it right away.”
Basically, inventory is still low, even though more homes are coming. But you shouldn’t put your plans on hold because you’re waiting for those additional houses to hit the market. Instead, stick with your search and persevere through today’s low inventory. You can find your next home if you’re patient and focused.
Remember your goals and why finding a home is so important. Those things should be the driving force behind your search. Share them with your agent and be clear about your priorities. Your trusted advisor is your greatest support as you navigate today’s low housing supply to find the home of your dreams.
If you’re planning to buy this year, the key to success will be patience given today’s low inventory. Let’s connect to discuss what’s happening in our area, what homes are available, and why it’s still worthwhile to prioritize your home search today.
Boston condo inventory based on pice brackets. All stats are from MLS Data.
$199,000 or Less – # of Boston condos for sale – 223. Avg. price per sq ft. $80.00
$200,000 – $300,000 – # of Boston condos – 400. Avg. price per sq. ft. $113.00
$301,000 – $400,000 – # of Boston condos – 486. Avg. price per sq ft. $260.00
$401,000 – $500,000 – # of Boston condos – 313. Avg. price per sq ft. $411.00
$501,000 – $600,000 – # of Boston condos – 208. Avg. price per sq ft. $489.00
$601,000 – $700,000 – # of Boston condos – 132. Avg. price per sq ft. $545.00
$701,000 – $800,000 – # of Boston condos – 92. Avg. price per sq ft. $532.00
$801,000 – $900,000 – # of Boston condos – 67. Avg. price per sq ft. $611.00
$901,000 – $1,000,000 – # of Boston condos – 29. Avg price per sq ft $607.00
For the million dollar plus inventory I based it on a larger spread.
$1,100,000 – $2,000,000 – # of Boston condos – 194. Avg. price per sq ft. $797.00
$2,100,000 – $3,000,000 – # of Boston condos – 66. Avg. price per sq ft $1,032.00
$3,100,000 – $4,000,000 – # of Boston condos – 24. Avg. price per sq ft $1,126.00
$4,100,000 – $5,000,000 – # of Boston condos – 17. Avg. price per sq ft. $1,338.00
$5,100,000 – $6,000,000 – # of Boston condos – 9. Avg. price per sq ft. $1,475.00
$6,100,000 – 9,000,000 – # of Boston condos – 5. Avg. price per sq ft. $1,656.00
$9,000,000 and up – Number of Boston condos – 3. Avg. price per sq ft. $2,050.00
1. The avg. price per sq ft is “asking price”
2. These numbers do NOT include new Boston luxury condo developments such as “W”
3. Area includes all of Metro Boston (i.e. including Dorchester)