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And now the question is, what will the rest of the year be like? The quick answer depends upon supply and demand. Unfortunately, no one knows how much supply will be available from which buyers can choose. Naturally, there are always greedy sellers who overprice their properties intentionally or who are misguided by improper representation. Those will remain on the market in perpetuity until those sellers become motivated enough to lower their prices. Then there are those properties which interest only a handful of buyers because the homes are in disrepair, located on a busy street or in an undesirable area, or have a weird floor plan or lot... all items which can be compensated when the asking price is low enough. But all the desirable properties priced competitively will vanish soon after they are advertised for sale unless sufficient numbers of homeowners decide to make a move and list their homes for sale.
In many cases, potential home sellers who are wanting to move up or move down here in the Boston area are too fearful to sell until they find a place to buy. This creates a Catch-22 situation which occurs time and again but in cycles. The first cycle, which is what we are experiencing now, is when sellers are eager to sell but afraid they won't be able to find an affordable replacement home because there's a shortage of housing. The second cycle entails sellers unable to buy because there's an oversupply of housing and they are having a difficult time in finding a buyer for their homes.
Below tells the tale of the sales activity in 60+ towns and neighborhoods in and around Boston. Look up the name of the town/area in the alphabetized list on the left. Based upon the number of homes Active on 4/2/21 and the number of homes Sold in March, we can determine how many months (Inventory Supply) it would take before all the Active inventory is sold off... provided no other homes are placed on the market until then. Since homes are continually coming on and off the market, it is wiser to look at how the market absorbs its inventory over time (Historical AR). As an example, Allston had 5 homes sales in March. Although 16 homes on the market divided by 5 equals 3.2, historical sales more closely approach the 8 sales per month seen in Avg YTD. Further explanations follow the spreadsheet.
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Your best opportunities to get a deal on your purchase or at least to avoid bidding wars is to look at areas where the AR is greater than 4.5 (ideally, greater than 6). The lower the AR amount, the more competition you will have with other buyers and the less interested sellers will be to negotiate.
Unlike buyers, you will find most areas of the greater Boston area favor sellers. Look, for example, at Natick or Ashland where the number of sales in March were way higher than the current number of homes on the market. Therefore, a properly-priced home should sell super fast in any of the areas where the AR is 1 or less.
Whether you are buying or selling or both, contact me if you want the best strategy for dealing with the market we are in now.
A combination of low inventory and high sales for the month of February paints a very rosy picture for Boston area home sellers. However, this should not make homeowners complacent about how long this will last. We are experiencing an unprecedented "bull market" in our real estate market and can understandably rejoice in how things have been going over the past several years; but, there will be a correction in the near future. The city of Boston is already seeing falling prices in several of its neighborhoods and other will follow.
Normally, one might expect to see a list of the top 5 or 10 towns/neighborhoods with the most activity followed with a similar list of the slowest and worst performing; however, of the towns/neighborhoods I have been monitoring closely, over 2/3 are not just "hot" but boiling hot. There are only two neighborhoods as of March 3 that are mired in a buyer's market:
1. Chinatown-Leather District
2. Downtown-Financial District
You will be hard-pressed to find a "deal" anywhere around the metroplex except for these two areas. With so much inventory available in Downtown and Chinatown, buyers have an opportunity to make low-ball offers. On the other hand, if you are looking to buy in Ashland, you can expect to see multiple offers when the next property hits the market.
All this said, there is an additional important point to make. All of these numbers can change in a matter of days. As spring arrives, more people will want to put their properties on the market which will contribute to cooling the market down some. So, if you have been thinking that the summer is the best time to sell, think again. NOW is the best time to have your property on the market!
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1. Average sales YTD is the average of January and February sales for this year.
2. Inventory Supply indicates how long it might take for the current inventory to sell if no other new listings come on the market. Since this is unrealistic, the next column titled Historical AR, gives a more accurate number of months for the market to absorb the current inventory.
If the AR value is under 3, this indicates a seller's market.
If the AR value is 3 - 6, this indicates a balanced market.
If the AR value is greater than 6, this indicates a buyer's market.
Here are the Boston neighborhoods already experiencing a buyer's market. These neighborhoods are seeing lowering home values and longer days on market for those properties which do sell.
Top 5 best neighborhoods of dropping prices to buy a home in and also the top 5 worst neighborhoods to sell a home in:
Top 5 best neighborhoods to sell a home in and also the top 5 worst neighborhoods of rising prices to buy in:
Towns/neighborhoods with a historical AR of 3 or less are considered in a seller's market.
Towns/neighborhoods with a historical AR of 3-6 are considered in a balanced market.
Towns/neighborhoods with a historical AR of greater than 6 are considered in a buyer's market.
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Sellers in metropolitan Boston have been enjoying a seller's market of bidding wars and rising prices for several years. In fact, it has been going on so long that buyers and sellers alike believe it will continue indefinitely. This reason why the seller's market has lasted so long is because interest rates have continued to remain low with no increase in sight. Although this has benefited many who have been able to qualify to purchase a home or refinance their mortgages, the spending binge which we can expect politicians in Washington to go on this year will likely cause a sharp market correction. Based upon the rhetoric of pre-election days, we can likely expect the economy to change within the next 18 months. This is the window of time in which homeowners who are thinking of selling should get their homes on the market. Buyers, on the other hand, can afford to put off buying as prices will come down over the next several years. Mind you, as prices fall, interest rates will rise. Although most areas of metropolitan Boston are still seeing low inventories, several neighborhoods in Boston are already in a buyer's market of dropping prices.
This New Year is bringing mixed feelings for Boston area buyers and sellers. Although 2020 was a rough year for many due to layoffs and pitiful help from the government which had caused the shuttering of many businesses and accompanying layoffs, there were bright spots here and there in the economy and in Boston's real estate market. It is true that home sales outside Boston really exploded in 2020. Where buyers would think they could pick up a cheap home in the outlying regions, they instead found themselves in bidding wars and escalating prices in the unlikeliest of places. Myself, I had a buyer looking out west in the Leominster area. I told my client that houses in the area in good condition were going about $100,000 over their assessed values. My client is now a proud owner of a Leominster home. So, when I say I will serve my clients anywhere in eastern Massachusetts, you know I'm telling the truth!
Homeowners in Boston have enjoyed a great, seller's market. In fact, some parts of Boston have enjoyed a lengthier seller's market with terrific appreciation thanks to bidding wars (multiple offers) within days of their listings coming on the market. However, there's a saying, "All good things must come to an end". Although several neighborhoods of Boston are still experiencing a seller's market where listings are still in short supply, other areas are in a balanced market where the number of available listings (supply) and buyers (demand) are considered to be in balance. On the other hand, the flight of city office workers now getting to work remotely from home has increased the number of homes for sale in Boston to a level that has pushed the other half of Boston's neighborhoods into a buyer's market with downward pressure on prices. For sellers who have bought in the past couple of years and wanting/needing to sell, they are already looking at losing money. What this means for all sellers is that now is still the time to list their homes on the market at a reasonable price because even those who are already having to price lower than desired will see their prices drop even further as time moves on. Those who have waited for 2020 or 2021 are now feeling the financial pain of waiting too long to sell. Fortunately are those whose seller's market has extended even through 2020! But they, too, should count their blessings and sell NOW before they find themselves trying to sell in a buyer's market of downward spiraling prices.
The graph included here shows how real estate markets are cyclical. Prices and activity topped out by 2005-2006 which is illustrated by the high numbers of homes that failed to sell in 2006. On the other hand, prices began to rise 2010-2012 as inventory began to dry up. Generally speaking, 2014-2018 were good years for sellers. But as you can see from the graph, homes that are not selling are on the rise again. This means one thing only... Boston is heading into a buyer's market.
Sellers labor under the false impression that the best time to sell is in June when schools close for the summer. Some believe more correctly that spring is the better time to sell. However, for most areas around Boston, the best time is January. In many communities, March is the month where most homes sell. For others it might be April or May. Typically, sales begin to falter come June. Of course, each area is different and weird things can happen to throw things out of kilter like a pandemic, but I prefer to let statistics (the science!) show the way.
November and December present a unique challenge statistically. You would think that fewer homes sell with holiday making occupying most people's thoughts, but even though December sales are ofttimes few and far between, the same time a year earlier or a year later can astonish you!
Normally there are specific areas in or around Boston that are especially great for sellers or great for buyers. Due to the time of year, almost every town or neighborhood is looking good for sellers. The only three areas experiencing a buyer's market are in Boston proper - the neighborhoods of Downtown, Chinatown, and West End. A flood of new listings in the next few weeks should turn the tables back to where they were in October and clearly defined buyer's and seller's markets will reappear!
Please CLICK HERE to see a list of over 60 towns/neighborhoods and how they rank based upon end-of-year statistics. Remember, these statistics should change drastically in the near future. Therefore, sellers should put their homes on the market now and take advantage of current market conditions. Buyers might do better to wait until the dust settles in March!