As we head into Boston condo for sale season, prospective condo buyers can expect significant decreases in traffic and competition from pandemic-era levels. However, according to a new analysis from Zillow, there will still be competition for affordable homes.
“Affordability will still be a challenge for many buyers this year, but sellers who price and market their home competitively shouldn’t have a problem finding a buyer,” said Zillow Senior Economist Jeff Tucker in a press release. “The slight drop in mortgage costs since October should revive demand after last fall’s slump, especially in more affordable markets and neighborhoods, but we are unlikely to see competition approach the fever pitch seen in the last two years.”
While inventory across the country is similarly scarce to levels seen in early 2021, consumer demand has significantly decreased thanks to hefty increases in mortgage rates. This led to significant price cuts in January — last month, 22% of active listings underwent a price reduction, the highest January level since 2018.
However, Zillow says that people waiting for prices to “plunge or skyrocket” will be disappointed. Instead, prices will inch up for the spring home-buying season from the expected winter lows. Factors like inflation, unemployment and mortgage rates will ultimately determine supply and demand.
“The housing turnaround since November has coincided with what are typically the weakest three months of the year — forecasting the future off that can be dicey,” Tucker continued. “The economic news from earlier this winter raised hopes for a soft landing of the economy and housing market, but the risk of renewed inflation or even a recession is still significant, and either would have a serious impact on the housing market.”
2023 is upon us!
If there is one word to sum up what to expect in 2023, it’s slow.
* We won’t see any major price reductions on Boston condo listing prices
* Boston condo buyers will be patient, as media reports talk about the demise of the housing market.
* The recent mortgage rate hikes will price out many first-time home buyers.
* Both Boston condo sellers and buyers will have a slow reaction to the new reality of the current Boston condo for sale market
Boston condo sellers (and their agents) who are bold enough to list their home for sale early in the year will be relying on recent comparable sales to guide them on price. But where are the 2022 comps? They are all going to be higher than what the buyers are thinking. Sellers will likely to use the highest sales to determine their list price, so they will consider the bid-up sales from early 2022 as part of the dream too.
Their only hope is that no other new listings pop up in the same building or nearby to spoil it for them.
Let me start by stressing to Boston condo sellers, there’s no way to know exactly how Boston condo buyers think, but you’ll want to be prepared as much as possible.
What I see is that there’s a shift from a sellers market to a more buyer-friendlier market, but sellers still hold a lot of the cards.
With the recent rise in mortgage rates and affordability continues to dip, Boston condo sellers may have to shift their expectations to match the current market.
The days of bidding wars are pretty much over, and buyer are no longer going to waive contingencies such as financing and home inspections.
With that said, Boston condo sellers have a lot of equity and are locked in with low mortgage rates and are under no pressure to lower prices. They may even consider renting, until the market changes back in their favor.
Buyers will be determined to wait this out.
Mortgage rates have climber higher, and buyers will want to be compensated with lower prices – and it won’t matter much what the price is, they will just want it lower. But sellers aren’t going to believe it until they test out their aspirational price first.
Bottom line, we’re at a stalemate.
Listing agents won’t be rigorous about their initial list price, or about reducing their price after a few weeks of failure on the open market. They will just wait it out, and then 70 days later they will get lowballed…some will accept it, others will pull their condo off-the-market.
But hopefully it will mean that the needed new price compromise will be completed for the Spring market of 2023!
Sorry I was so long winded with this Boston Real Estate Blog Post