A columnist reflected on history to help measure whether it’s a seller’s market, or a buyer’s market. I like it!
House-hunting’s transformation includes several market trends including people moving less often, consumers accessing detailed market info, near-instant cash buyers and tighter lending standards. Maybe the buyer/seller-market math should morph, too.
From 1990 through 2006, just before the bubble burst, California was a “buyer’s market” in 49 percent of all months and a “seller’s market” 17 percent of the time — using the traditional 6-month/3-month template and Realtor data.
Looking at the past 12 post-crash years — assuming you’d want to match that pattern — a buyer’s market would be 3.25 months-plus of supply and a seller’s market would be 2.25 months or less.
This evolving gap in homebuying supply is another reminder of today’s steep house-hunting challenges.
What will the Boston condo for sale market bring for buyers and sellers
If you tried to buying a Boston condo for sale during the pandemic, you know the limited supply of homes for sale was a considerable challenge. It created intense bidding wars which drove Boston condominium up as buyers competed with one another to be the winning offer.
But what was once your greatest challenge may now be your greatest opportunity. Today, data shows Boston condo buying demand is moderating in the wake of higher mortgage rates. Here are a few reasons why this shift in the housing market is good news for your Boston real estate plans.
There were many reasons for the limited number of homes on the market during the pandemic, including a history of under building new homes since the market crash in 2008. As the graph below shows, housing supply is well below what the market has seen for most of the past 10 years (see graph below):
But that graph also shows a trend back up in the right direction this year. That’s because moderating demand is slowing the pace of home sales and that’s one of the reasons housing supply is finally able to grow. For you, that means you’ll have more options to choose from, so it shouldn’t be as difficult to find your next home as it has been recently.
And having more options may also lead to less intense bidding wars. Data from the Realtors Confidence Index from the National Association of Realtors (NAR) shows this trend has already begun. In their recent reports, bidding wars are easing month-over-month (see graph below):
If you’ve been outbid before or you’ve struggled to find a home that meets your needs, breathe a welcome sigh of relief. The big takeaway here is you have more options and less competition today.
Just remember, while easing, data shows multiple-offer scenarios are still happening – they’re just not as intense as they were over the past year. You should still lean on an agent to guide you through the process and help you make your strongest offer up front.
If you’re still looking to make a move, it may be time to pick your home search back up today. Let’s connect to kick off the homebuying process.
What’s Ahead for the Boston Condos for Sale Market
As we begin another spring/summer season, everyone wants to know: “Where is the Boston condos for sale market headed in 2019?”
It’s not only buyers, sellers, and homeowners who are impacted. The Boston condo sales market plays an integral role in the overall U.S. economy. Fortunately, key indicators point toward a stable housing market in 2019 with signs of modest growth. However, shifting conditions could impact you if you plan to buy, sell, or refinance this year.
Boston Condo VALUES WILL INCREASE
The value of Boston downtown condos will continue to rise. Freddie Mac predicts housing prices will increase by 4.3 percent in 2019. While the rapid price appreciation we witnessed earlier in the decade has slowed, the combination of a strong economy, low unemployment, and a lack of inventory in many market segments continues to push prices higher.
“Ninety percent of markets are experiencing price gains while very few are experiencing consistent price declines,” according to National Association of Realtors (NAR) Chief Economist Lawrence Yun.
What does it mean for you?
If you’re in the market to buy a Boston Seaport condo for sale, Beacon Hill condos for sale or Boston Midtown condo act fast. Prices will continue to go up, so you’ll pay more the longer you wait. If you’re a current homeowner, real estate has proven once again to be a solid investment over the long term.
SALES LEVELS WILL STABILIZE
Yun and other economists expect home sales to remain relatively flat over the next couple of years. Freddie Mac forecasts homes sales will increase 1 percent to 6.08 million in 2019 and 2 percent to 6.20 million in 2020.1
“The medium and long-term prospects for housing are good because demographics are going to continue to support demand,” explains Tendayi Kapfidze, chief economist for LendingTree. “With a slower price appreciation, incomes have an opportunity to catch up. With slower sales, inventory has an opportunity to normalize. A slowdown in 2019 creates a healthier housing market going forward.”
Boston Condo Sellers: What does it mean for you?
If you’ve been scared off by reports of a market slowdown, it’s important to keep things in perspective. A cool down can prevent a hot market from becoming overheated. A gradual and sustainable pace of growth is preferable for long-term economic stability.
MORTGAGE RATES WILL RISE
The Mortgage Bankers Association predicts the Federal Reserve will raise interest rates eventually, resulting in a rise in mortgage rates. While no one can predict future mortgage rates with certainty, Realtor.com Chief Economist Danielle Hale estimates that the rate for a 30-year mortgage will reach 5 percent by the end of 2019.
While mortgage rates above 5 percent may seem high to today’s Boston Seaport condo buyers, it’s not out of line with historical standards. According to Hale, “The average mortgage rate in the 1990s was 8.1 percent, and rates didn’t fall below 5 percent until 2009. So for buyers who can make the math work, buying a home is likely still an investment worth making.”7
What does it mean for you?
If you’re in the market for Boston condos for sale or refinance an existing mortgage, you may want to act quickly before mortgage rates rise. To qualify for the lowest rate available, take steps to improve your credit score, pay down existing debt, and save up for a larger down payment.