The direction of the Boston condo sales market
Surging mortgage prices are causing condo buyers to step back amid signs a recent Redfin report found point to the start of a shift in the market.
The typical monthly mortgage payment rose by more than $500
Since the beginning of the year, the typical monthly mortgage payment rose by more than $500, according to the report. And with rates quickly approaching 5%, Redfin expects the impact of mortgage rates on homebuyer demand to change from the Boston condo buyers looking to purchase before rates rise again to buyers stepping back as costs exceed their budgets.
Several signs are pointing to the start of this shift, the report found, including fewer people searching online for homes and applying for mortgages than this time last year. Year-to-date growth in home tours is far below 2021 levels. More Boston condo sellers are reducing their prices. And the share of homes selling quickly continues to grow yet at a much slower pace than we’ve seen in previous months.
All this doesn’t mean the Boston condo market isn’t still hot. Homes today are still selling faster and for more money, as supply remains near record lows and fewer homeowners are putting their homes on the market.
Redfin chief economist Daryl Fairweather said today’s buyers may not feel like the market is getting any easier because they are oftentimes competing against investors, all-cash buyers and those leaving expensive cities who aren’t as sensitive to mortgage rates.
“But there are early indicators that the market is turning, and we expect the softening to become more apparent in the coming weeks, eventually causing home-price growth to slow,” he said. “We’ll be watching closely to see whether the market slows from 100 mph to 90 or 100 mph to 75.”
Last March, Redfin said it began receiving fewer requests for agents in pricey coastal markets like Seattle, San Diego, Boston and Washington, D.C. – areas the company found to be experiencing year-over-year declines in pending sales, even though homes are selling quicker. California is seeing larger declines in searches, touring and mortgage applications than anywhere else.
Mortgage applications and rates are more indicators a change is underway.
For the week ended March 25, mortgage applications fell 10% from the same time last year, the second week in a row of double-digit annual decreases. It was up 1% from the prior week.
Thirty-year mortgage rates rose to 4.67% for the week ended March 31, compared to 4.42% the previous week. It was the highest level they’ve been since December 2018.
In the four weeks ended March 27, active listings fell 22% year over year to 475,800, the fifth-lowest level on record. The median asking price rose 15% from 2021 to $399,450, a new record high. Meanwhile, the median sale price increased 17% year over year to a record-high of $382,713. It was also the biggest jump in the median sale price since the four weeks ended Aug. 1, 2021.
Fifty-nine percent of homes went under contract with an accepted offer within the first two weeks of being listed, up 4% from last year, marking another record.
Additionally, 51% of homes sold above list price, up from 40% last year, the highest since the four weeks ended Aug. 15, 2021.
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Boston housing market maintains momentum in November
Boston’s housing market stayed strong in November, with the median sales price of homes sold during the month rising 11% on a yearly basis and 3.7% on a monthly one, RE/MAX reported, citing data from its National Housing Report.
At the same time, days on market slid 0.3% annually and 0.1% monthly to 30 days.
“The market is roaring along, with only half the seasonal slowdown we typically see from October to November,” RE/MAX LLC President Nick Bailey said in a press release. “The small drop in prices is great news for buyers, and it could be an early sign of some balance coming back into the market.”
Among the 51 metro areas surveyed in November, closed transactions were down 4.9% from October, compared to a normal seasonal decrease of 12%. Billings, Mont., saw the greatest year-over-year decline in closed deals, with a 13% drop to 248.
Nationally, the median sales price dropped 2.9% month over month to $330,000, registering the largest monthly decline since the pandemic began. Year over year, the median price was up 11.9%. Home sellers have enjoyed annual increases in sales prices for 35 consecutive months, RE/MAX said. Phoenix saw the largest increase in median price, with a 27.2% annual jump to $425,000, followed by Salt Lake City with a 25.3% to $487,250 and Boise, Idaho, with a 24.8% climb to $475,581.
At the same time, the supply of homes for sale decline 17.7% month over month and 30.1% year over year to 1.2 months. Denver and Seattle tied for the lowest inventory, at 0.5%, followed by Albuquerque and Manchester, N.H.
Average days on market was 29, up two days from October. Raleigh-Durham, N.C., saw the greatest year-over-year drop– in days on market with a 45.9% decline to 20.
“The lack of available inventory continues to be a challenge, but 2021 has been a very strong year for home sales,” Bailey said. “That says a lot about the resiliency of the housing market and the importance of homeownership in people’s lives. With work flexibility, low interest rates, generational factors and continued high demand, we’re heading into 2022 with plenty of reasons to be optimistic.”
Anyone that has read this blog for any length of time knows that I’m a big believer in Google Analytics as one tool in predicting improvement in the local real estate market. I just did another Google Analytic (today) on the term “Boston real estate” the results still don’t show any significant increase in Google search traffic.
On the positive side, I’ve seen an increase in internet sales leads and the agents that work for me seem to be going on more sales and rental showings.
File Under: Boston condo sales market for 2011: Verdict still out.