Boston condos for sale: What’s going on with the market
Boston condos for sale: What’s going on with the market
Homebuyer demand remains strong despite rising mortgage rates and shrinking listings, Zillow’s October market report found.
Last month, homebuyer demand showed its resilience, despite mortgage rates being at a 23-year high and inventory continuing to be limited, with homes priced appropriately being purchased in record time.
Zillow chief economist Skylar Olsen says as mortgage rates neared 8% in October, the U.S. housing market continues to cool, with inventory rising and appreciation decelerating.
“As interest rates rose, some pent-up sellers appear to have been shaken free of waiting for rates to drop,” Olsen said. “New listings have nearly escaped the red annually and are trending out of a mortgage rate lock-induced hole. A record number of households in prime homebuying ages are providing buyers, despite the headwinds.”
October mortgage rates were 8% at month’s end, pushing monthly payments up by more than 4% from September. And that average $1,991 monthly mortgage payment is almost 10% higher than it was a year ago and nearly double what it was in 2021.
The national typical home value in October was $347,972, up 2.3% from a year earlier. October home values did fall 0.3% from September (compared to the 0.1% drop from August to September), showing “a slightly faster deceleration than pre-pandemic norms,” according to the report.
In 40 of the top 50 markets, home values fell in October.
Boston home values rose 6.8% year over year to $659,680 but were down 0.1% from September.
Housing inventory last month was still depleted, as new listings fell 5% from September, a drop the report notes is actually smaller than seasonally expected. But, it also found inventory levels to be the lowest of any October since 2018.
Total inventory was a different story last month as it climbed 2.6% from September, a result of “fewer sales and an unexpectedly small September dropoff in new listings,” Zillow said.
New inventory in Boston in October fell 9.3% from 2022, while total inventory dropped 18.9%.
The residential real estate market is remaining resilient as the country still struggles to beat the COVID-19 pandemic. Three separate reports recently revealed how the housing market is still showing growth. Here’s a look at each one.
The survey explains that purchaser demand remains strong:
“This month’s overall homebuyer demand rating…was easily the strongest sequential gain in our survey history…Strength continues to be led by the entry-level…While high-end demand is less robust in an absolute sense, there has also been relative improvement, with contacts attributing incremental improvement to the stock market’s rebound, record low mortgage rates and luxury customers trading out of high-priced cities.”
The index reveals that builder confidence has returned to levels last seen prior to the pandemic:
“In a strong signal that the housing market is ready to lead a post-COVID economic recovery, builder confidence in the market for newly-built single-family homes jumped 14 points to 72 in July, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI now stands at the solid pre-pandemic reading in March before the outbreak affected much of the nation.”
This index leverages a weighted average of four key components of the housing industry, tracking each of the following:
- Housing Demand – Growth in online search activity
- Home Price – Growth in asking prices
- Housing Supply – Growth of new listings
- The pace of Sales – Difference in time-on-market
It then compares the current status “to the last week of January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”
The latest results came in at 101, with realtor.com explaining:
“The U.S. Housing Market has recovered from the immediate disruption caused by the COVID pandemic and returned to January 2020 growth levels.”
Real estate brokers, home builders, and industry data all agree that the housing market has surged back to pre-COVID levels, showing growth, strength, and incredible resilience.
What’s going on in our Boston condo market as we round out 1/2 way through the year? Let’s find out by taking a look at the year-over-year changes
First of all, it’s been a long time since we’ve seen this kind of movement in our market.
There has been a spike in inventory since November of last year, homes coming on to our market this December
The number of pending home sales, though, saw a massive change in the opposite direction, dropping year over year. Unsurprisingly, this means that the number of closings has also dropped.
So, given the fact that fewer Boston condos are selling while an increased number of properties continue to hit our market, inventory has risen year over year. The months of supply, or the number of months it would take for our market to become depleted of listings if no new homes were to be listed during that time, also rose,
“Buyers and sellers should begin preparing right away in order to reap the best results from our market.”
The good news for sellers is that while our months of supply did see a spike, the increase is relative to last year’s uncharacteristically low level. A balanced market has anywhere between four and six months of supply
Our current market holds a lot of opportunities for buyers and sellers alike, as inventory is low and there has been some interest rate relief. If interest rates continue to rise, as they are projected to do, buyers could end up paying more for a home in the future even if they buy at a lower price.
The bottom line is to make a move if you’re thinking of doing so. Neither our low-interest rates nor our low inventory will stay that way forever, so buyers and sellers should begin preparing right away in order to reap the best results from our market. If you are happy with what you own, though, and will continue to be happy until the next upcycle that is a few years ahead of us, then staying put is also an option. It’s all about determining your goals.
If you have any other questions, would like more information, or are curious about how market conditions in your specific area may impact your buying or selling experience, feel free to give us a call or send us an email. We look forward to hearing from you soon