BOSTON HOUSING SALES DOWN!
Everyone wants to know what effect the corona virus/shelter-in-place lock downs have had and will have on real estate. Although some governors have labeled real estate an essential service, the media have sufficiently scared the public into cowering in their homes and not getting out and looking for their next home as much as they would normally be doing at this time of year. With very few exceptions, sales this April are less than what they should be. Since real estate markets vary from state to state, county to county, and even within cities, we shouldn't be interested in general stories you might read in the newspaper or hear on the nightly news regarding real estate sales
"nationwide" or in one state or another. What matters is what is happening in your town. Consequently, what follows below is a table showing 63 individual towns and neighborhoods in and around Boston to give you a hyper-local feel for what is going on in our "local" area.
The table has four columns next to each town. The first is the average number of sales from Jan 1, 2020 through Apr 30, 2020. Therefore, 20 total sales = 5 on average per month. The second column shows what impact the shutdown has had on April sales. You will notice that 57 of the 65 market areas saw a decrease in the rate of sales when April should have seen a significant increase. This does not bode well for May.
The third column shows the number of homes on the market and available for purchase as of May 4. Not unexpectedly, there are fewer homes on the market that what we would normally expect due to the fact that sellers, unless they are desperate to sell, do not want strangers parading through their home and possibly contaminating it. Although determining absorption rates usually utilize the average number of sales per month, for example, 5.5 for Allston, given current circumstances, I think it wiser to use the most recent month's sales to calculate how many months it will take for the current inventory to sell off. The caveat, however, is that this assumes that no other properties will come on the market until all of these sell.
Real estate markets are dynamic. They change daily. So, although absorption rates are constantly changing, they do give us an idea of whether we are in a buyer's or a seller's market.
You obviously want to get a good deal on your purchase, right?! Your strategy should be to find homes that have been on the market a long time. The usual reason for them not selling boils down to the property being overpriced. Being overpriced gives you the opportunity to make a low-ball offer without worrying about others bidding up the price which occurs in a seller's market. Ideally, you want to be buying in a buyer's market. A buyer's market occurs whenever there is so much inventory on hand that it will take more than 6 months for everything to be sold. If you look down the fourth column for numbers 6 or more, those are the places you should be able to negotiate a good deal.
We have had a long, great seller's market beginning back in 2012. Prices began rising until finally plateauing in 2018. Robust markets where sales have continued at a good pace have not seen many bidding wars, certainly not above asking price; and so, you have to be careful about how you price your property. You don't want to be too high and have it sit without showings and/or offers. The higher the number in the fourth column, the more realistic you are going to need to be about pricing. The question you now have on your mind is likely: should I put my property on the market now or wait? Since the best time to sell is March through June, you cannot afford to wait. Sales drop off precipitously in the summer time!
Interpreting absorption rate data:
0-3 months = seller's market. 3-6 months = balanced market. 6+ months = buyer's market.