Is the Boston condo market cooling off?
The Massachusetts housing market is showing signs of cooling
After two years of record-setting activity, the Boston condo for sale market is showing signs it might be cooling, according to a new report.
The busy summer market is here according to the Massachusetts Association of Realtors May housing statistics report that found despite rising home price and mortgage interest rates, Bay State single-family home and condominium sales increased again for the third month in a row.
With existing home sales falling 24% and pending sales dropping 3.9% nationally from April, the slowdown has allowed supply to rebound, according to the report, with inventory increasing 10.8% month of over month. Despite the rebound, available homes for sale remain down 10.4% from last year.
Dawn Ruffini, MAR president, said the biggest issue the market is facing is the shortage of houses.
“Until we are able to increase supply, more households are going to continue to be priced out of the market,” Ruffini said. “We need to act now to expand housing access as it will, in turn, reduce home prices and allow more people to enter the market.”
Last month, the median price for a single-family home was up 12.3% year over year to $617,750 and new single-family home listings rose 6.2%.
Condominium prices also rose in May to $531,501, up 5.1% from 2021, while condo listings fell 4.9% from last year.
The report also found single-family closed sales fell 7.8% compared to last year, while closed condo sales dropped 12.4%.
Updated: Boston Real Estate Blog 2022
The white-hot pace of the housing market appears to be cooling to red, according to Redfin, which released a new report that includes several indications that the lopsided seller’s market could be inching closer to an equilibrium.
During the four-week period ended July 11, the average weekly share of homes for sale with a price drop surpassed 4% for the first time since September 2020, and the share of homes sold over list price, the share of homes sold within a week and the median days a home spent on market either cooled off or plateaued during the period, Redfin said in a release.
“Asking prices are still high, but the share of listings with price drops is rising steadily and could soon reach pre-pandemic levels,” Redfin chief economist Daryl Fairweather said in a release. “That’s an early indication that we are past the peak for this intense seller’s market. Buyers may begin to regain some negotiating power on properties that have been on the market for more than a week.”
Nevertheless, the median home-sale price reached a record high during the period, at $365,500, according to Redfin.
Pending home sales had their smallest year-over-year increase in more than a year during the four-week period ended July 11, rising 11%.
A record 55% of homes sold above list price, which is up from 28% a year earlier, Redfin said. However, this measure appears to be plateauing, as it has been at 54% to 55% since the four-week period ended June 27, Redfin said.
The share of homes for sale with price drops rose to 4.1%, which is above the 2020 level and closer to the 2019 level of 4.7% at the same time in 2019.
We’re smack in the middle of the Boston condo sales season, one of the two busiest times of the year for buying and selling Boston homes. (The other is April through June.) Word on the street over the July and August months was that the market had cooled down. But we weren’t sure if it was the typical summer slowdown, or the start of a downturn of sorts.
I can say that the market is definitely changing. Though prices seem to be holding up, I’m seeing various shifts in buyer behavior. Here’s what my colleagues and I are experiencing:
Boston is very neighborhood-centric when it comes to prices, and there are certain very popular areas that have actually increased in price over the past year. But the general trend is worth noting as we head into 2019 that asking and selling prices are on a flattening trend.
Buyers are shying away from Boston condos that don’t meet all their criteria. And if a property is in a more remote area, far from transportation or a good retail area, it will probably spend a bit of time on the market. Sellers need to be super careful about their list prices, and should be looking at a range of comps (not just the high-flying ones from last Spring).
I’ve spoken with one or two prospects who have decided that they’re going to see where the market is in 2019 before they get serious about buying. The consensus is that prices are going to drop because interest rates are on the upswing, among other reasons. The other half of the equation, however, is that we have a very limited supply for the demand. And if prices indeed drop, there will undoubtedly be a bunch of homeowners who will decide to hold off on selling until prices go up.
I’m expecting to see a strong finish to 2018, with a steady volume between now and the end of the year. The market is still very competitive.