Boston sales data – sellers lowering prices, but is it enough?
The share of home sellers who dropped their asking price shot up to a six-month-high of 15% for the four weeks ending May 1, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s up from 9% a year earlier, and represents the largest annual gain on record in Redfin’s weekly housing data back through 2015
For homebuyers, the typical monthly mortgage payment skyrocketed a record 42% to a new high during the same period. Although a growing share of sellers are responding to the palpable drop in homebuyer demand by lowering their prices, sellers remain far outnumbered by buyers, so the typical home flies off the market at the fastest pace on record and for more than its asking price.
“Homebuyers continue to be squeezed in nearly every way possible, which is causing some to take a step back from the market,” said Redfin Chief Economist Daryl Fairweather. “Unfortunately for buyers hoping to find a deal as competition cools, sellers are pulling back even faster, which is keeping the market deep in seller’s territory. So even though price drops are becoming more common, most homes are still selling above asking price and in record time.”
- Fewer people searched for “homes for sale” on Google—searches during the week ending April 30 were down 7% from a year earlier.
- The seasonally-adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—was down 1% year over year during the week ending May 1. It dropped 10% in the past four weeks, compared with a 1% decrease during the same period a year earlier.
- Touring activity from the first week of January through May 1 was 24 percentage points behind the same period in 2021, according to home tour technology company ShowingTime.
- Mortgage purchase applications were down 11% from a year earlier, while the seasonally-adjusted index increased 4% week over week during the week ending April 29.
- For the week ending May 5, 30-year mortgage rates increased to 5.27%—the highest level since August 2009.
The median home sale price was up 17% year over year—the biggest increase since August—to a record $396,125.
The median asking price of newly listed homes increased 16% year over year to $408,458, a new all-time high.
The monthly mortgage payment on the median asking price home rose to a record high of $2,404 at the current 5.27% mortgage rate. This was up 42%—an all-time high—from $1,688 a year earlier, when mortgage rates were 2.96%.
Pending home sales were down 4% year over year, the largest decrease since mid-February.
New listings of homes for sale were down 6% from a year earlier, and have been down from 2021 since mid-March.
Active listings (the number of homes listed for sale at any point during the period) fell 18% year over year.
56% of homes that went under contract had an accepted offer within the first two weeks on the market, up from 54% a year earlier, down less than a percentage point from the record high during the four-week period ending March 27.
42% of homes that went under contract had an accepted offer within one week of hitting the market, up from 41% a year earlier, down less than a percentage point from the record high during the four-week period ending March 27.
Homes that sold were on the market for a record-low median of 15.5 days, down from 21.2 days a year earlier.
A record 56% of homes sold above list price, up from 47% a year earlier.
On average, 3.7% of homes for sale each week had a price drop. Overall, 14.9% dropped their price in the past four weeks, up from 11.2% a month earlier and 9.1% a year ago. This was the highest share since mid-November.
The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, rose to an all-time high of 102.8%. In other words, the average home sold for 2.8% above its asking price. This was up from 101% a year earlier.
To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/housing-market-update-record-spke-in-price-drops/
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Several new reports from real estate companies suggest Boston condo buyers may be starting to get a break in this red-hot housing market. More listings are coming up for sale, and some sellers are thinking about lowering their asking prices.
The number of new listings nation wide last week jumped 8% from a year ago, according to Realtor.com. This follows four straight weeks of annual declines in new listings. The total amount of active inventory for sale is still down 13% from a year ago, but it may be on track, given the rise in new listings, to surpass year-ago levels by this summer. New listings tend to peak in May.
Prices, however, are still well above year-ago levels. Higher mortgage rates are also making houses less affordable. The average borrower is now paying about 38% more than they would have for the same home a year ago on a monthly payment, according to Realtor.com.
For some Boston condo buyers, general inflation and related mortgage rate hikes mean less budget flexibility to pursue freshly listed homes. For those who can afford to persist, a silver lining could be relatively less competition for more for sale home options, which could lead to some relief from relentless home price momentum.
As more Boston condo supply comes on the market and mortgage rates rise sharply, Boston condo sellers appear to be coming back to Earth, at least a little. About 12% of homes for sale had a price drop during the four weeks ending April 3. That’s up from 9% a year ago, according to Redfin. The rate of sellers dropping their asking prices is now growing faster each month than it has since August.
“Price drops are still rare, but the fact that they are becoming more frequent is one clear sign that the housing market is cooling,” said Daryl Fairweather, Redfin’s chief economist. “It goes to show that there’s a limit to sellers’ power. There is still way more demand than supply, and buyers are still sweating, but sellers can no longer overprice their home and still expect buyers to clamor at their door.”
Boston condo buyers are sweating because the average rate on the 30-year fixed mortgage, which has been rising since January, really took off in the past few weeks. It surpassed 5% earlier this week, according to Mortgage News Daily. Consumers are more pessimistic about the housing market, according to a monthly survey from Fannie Mae, and especially about mortgage rates.
The share of consumers who expect mortgage rates to rise further increased to 69% from 67% in March. More consumers also said they believe home prices will continue to rise.
Source: CNBC Real Estate
“If consumer pessimism toward homebuying conditions continues, and the recent mortgage rate increases are sustained, then we expect to see an even greater cooling of the housing market than previously forecast,” wrote Mark Palim, vice president and deputy chief economist at Fannie Mae.
I was curious as to what the average seller is doing, in the city.
My guess was that sellers were being stubborn, that they weren’t lowering their prices. I assumed this was a big reason why buyers were pulling back.
I based this on the FACT that the number of sales has dropped 20-25%, while average and median prices have dipped just a bit (in the city, less than 3%).
In reality, sellers seem to have gotten the picture.
I did an analysis of all condos listed for sale in the South End (using data from our local Multiple Listing Service).
There are currently 239 condos on the market in the South End.
Some units came on over the past couple of days; the unit on the market the longest has been on for 539 days, but don’t get the wrong idea. It is a unit in a development under construction, and it was put into MLS back when it was just a hole in the ground.
Out of the 239, 125 have been on the market under 100 days.
Out of the 239, 115 have lowered their prices.
Out of the 239, 4 have decreased their prices by more than 20% (all under 26%).
Out of the 239, 20 have decreased their prices by 10-20%.
Out of the 239, 37 have decreased their prices by 5-10%.
Out of the 239, 54 have decreased their prices by 0-5%.
Out of the 239, 11 have increased their prices (haha … these are mostly developer units where they were able to raise their prices as units went under agreement).
The question remains: Did the sellers simply start too high, and is there a long way down to go, before buyers get back in?
It’s not just lower prices that drives buyers, however. I think perception play a large part in the equation. If you read the comments section of my recent “first-time homebuyers step back into market” post, you’ll see that buyers are sitting on the sidelines, not because they feel prices have gone down, but because they believe they will go down, more.
I disagree with this theory; I think prices will remain where they are now, or drop by a small amount, percentage-wise. However, I can certainly understand buyers’ behavior.
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