The Boston condo for sale shortage is expected to get more extreme as homebuyer demand continues to outweigh inventory levels, a new study found.
As the spring Boston real estate buying season begins, HouseCanary’s latest Market Pulse report compared data between March 2021 and March 2020 and found the volume of new monthly listings nationwide to be down 11.5% year over year. Last month, 284,298 new listings were placed on the market, a 0.9% decrease compared to March 2020. Additionally, 348,422 listings went under contract across the country, a 22.7% increase from March 2020.
New listing activity year-over-year decreased by 24.3% for homes in the $200,000 and under range. Homes listed between $200,000 and $400,000 had a decrease of 13.2%. New listing activity increased in houses priced above $400,000. New home listings between $400,000 and $600,000 were up 15.1%, and homes priced from $600,000 to $1 million were up 47%.
Boston real estate price appreciation continues to accelerate as the ongoing supply shortage drives prices up, the report found. That shortage is expected to continue over the coming months. The median single-family home price for the week ending April 2 was $378,408, up 16.5% year over year. The median closed price was $367,242, up 22.4%. Additionally, the month-over-month median price of single-family listings was up 2.2% and median prices of closed listings were up 5.4%.
“As we enter the spring home buying season, the market is experiencing extremely limited supply compounded by an outsized level of demand that shows no signs of easing,” HouseCanary Co-founder and CEO Jeremy Sicklick said in a press release. “Bidding wars have broken out across the country, and homes on the upper end of the price spectrum are selling at significantly higher rates compared to a year ago. The extreme supply shortage continues to put upward pressure on single-family home prices – a more favorable environment for sellers – and we expect this trend to continue over the coming months. Looking further ahead, however, rising mortgage rates could cool future price growth as potential buyers continue to get priced out of the market.
Listing inventory levels are down significantly in the Bay State.
For the week ending April 2, new listings in Massachusetts were down 45.1% from week ending March 13, 2020, down 2.5% year over year and down 31.7% week over week.
During that same time period, homes stayed on the market for 12 days, down 53.8% from week ending March 13, 2020 and down 75.5% year over year.
The report also found the median new list price of a home in the Bay State is $499,000, up 0.9% from week ending March 13, 2020 ($494,450) and up 10.9% year over year ($449,900).
Additionally, there were 1,321 listings under contract week ending April 2, a 2.1% decrease from week ending March 13, 2020 (1,350) and up 85.8% year over year (711).
There has been a great amount written on millennials and their impact on the Boston condo for sale market. However, the headlines often contradict each other. Some claim this generation is becoming the largest share of first-time Boston downtown condo buyers, while others claim millennials don’t want to own a Boston condo, blaming them for the dip in homeownership rate.
While it is true that millennials have achieved milestones like getting married, having kids, and buying Boston Beacon Hill condos later in life than their parents and grandparents did, they are not solely to blame for today’s housing market trends.
Freddie Mac’s Insight Report explored the impact of the Silent and Baby Boomer Generations on the housing market.
If millennials are unable to find a home to buy at a young age like their predecessors, then who is living in those homes?
The answer: Seniors born after 1931 are staying in their homes longer than previous generations, instead choosing to “age in place.”
Freddie Mac found that,
“this trend accounts for about 1.6 million houses held back from the market through 2018, representing about one year’s typical supply of new construction, or more than half of the current shortfall of 2.5 million housing units estimated in December’s Insight.
Older Americans prefer to age in place because they are satisfied with their communities, their homes, and their quality of life.”
According to the National Association of Realtors, inventory of homes for sale is currently at a 3.5-month supply, which means that nationally we are in a seller’s market. A ‘normal’ housing market requires 6-7 months inventory, a level we have not achieved since August 2012.
“The most important fundamental in today’s housing market is the lack of houses for sale. This shortage has been identified as an important barrier to young adults buying their first homes.”
If you are one of the many seniors who desires to retire in the same area you’ve always lived, you’re not alone. Will your current Beacon Hill home fit your needs throughout retirement? If you have any questions about demand for your Boston downtown condo, let’s get together to discuss the opportunities available today.