A collection of “sale” signs.
As the Federal Reserve Board is currently hiking interest rates, the latest report from the Massachusetts Association of Realtors revealed that the Massachusetts housing market is cooling down rapidly. Even though prices are increasing year-over-year, the growth is significantly slower, as observed through October. (1)
“The biggest takeaway for me was we were actually down across the board on pending sales, price and new listings,” explained Dawn Ruffini, president of Massachusetts Association of Realtors and a realtor at RE/MAX Connections. “And the decrease in the price month-over-month was more significant than I expected,” Ruffini added. After summer, median prices for a single-family home dropped from $626,000, where it peaked in June, to $547,000 last month. (3,1)
“The interest rate has basically doubled since summertime,” Ruffini stated. “And on top of that, you have a lot more of the inflationary pieces starting to hit people. Those coupled together are what’s driving the drop in median price. But at the same time, what’s holding the median price as high as it is, is the fact that we have such low housing supply here in Massachusetts.” (1)
The reports for October also revealed significant changes in the market. As home prices dropped, condo sales, which had been strong throughout the summer as a more inexpensive choice, plunged. Even though sales of multi-family homes decreased by 32.2 percent from last October, Ruffini suggested that the market may be changing. Houses for sale plummeted by 16.1 percent, and pending single-family home sales decreased by 10.2 percent compared to the previous year. (1)
“If they hold the rate where it is, we’ll be okay and the market will still continue to try to correct itself,” stated Ruffini. “If they decrease the rate and the mortgage rates drop below 5 percent, I think we’ll probably see that market pick up again and the median price start to climb.” (1)
“From what I’m hearing at least on the street—that may not be as reflective of the numbers yet—is there are more buyers starting to look at multi-families as opposed to single family homes because it helps them to get into a property and have a rental income,” Ruffini stated. It was also pointed out that fewer home buyers need to engage in a bidding war, which was common when the interest rates were at absolute rock bottom. “We are still seeing bidding wars, but not to the extent that it was before,” she said. “We are seeing a lot of return-to-normal behaviors for both buyers and sellers.” (4)
In Boston, Realtor.com forecasts prices to rise by 9.5 percent annually, while sales growth will be down by less than one percent. In Worcester, prices will rise by 10.6 percent while sales will expand by 2.5 percent. Additionally, in Springfield, prices will increase by 8.9 percent annually, while sales growth will be less than one percent. (5)
According to a survey from the Warren Group published in October, Massachusetts’ median single-family sale price jumped 7.8 percent over the years. This means it increased from $510,000 in September 2021 to $550,000 in September 2022. (5)
“The Boston metro is the highest-priced market on the list this month, priced 36.7 percent higher than the next most expensive market, Portland, ME. The median listing price of the Boston metro in October skewed the list’s average price higher,” the website states. “The Northeast in general, and the Boston metro specifically, are hotbeds of activity.” (5)
In October, condominium listings declined 28.03 percent, while condo prices increased 0.94 percent to $484,500. The rise in interest rates, inflation and economic unpredictability have all contributed to a nationwide decline in luxury house sales this year. (3)
Sources:
- https://www.bostonherald.com/2022/11/15/massachusetts-housing-market-continues-to-cool-prices-and-sales-slip-substantially/
- https://www.axios.com/local/boston/2022/12/05/boston-housing-market-cool-down
- https://bostonagentmagazine.com/2022/11/15/massachusetts-housing-market-cools-as-sellers-hold-off/
- https://www.thecentersquare.com/massachusetts/real-estate-market-in-massachusetts-is-slowing/article_d5cc998a-5ed2-11ed-adc3-af7f0fa8ab62.html
- https://www.masslive.com/realestate-news/2022/12/realtorcom-releases-predictions-for-2023-mass-real-estate-costs-rates.html