The holiday season has become the last refuge for bargain-starved home buyers in the ever tighter and pricier Bay State real estate market.
Mansion owners across Massachusetts did some pretty serious price cutting this December between Thanksgiving and Christmas, notes Bill Wendel of the Real Estate Cafe in Cambridge.
Overall, nearly a fifth of all homes on the market in the $3 million range saw their listing prices slashed at least 10 percent, and often more, Wendel notes in an analysis of the luxury sales market in Massachusetts, prepared for Banker & Tradesman.
Markdowns across the price range spectrum could also be found in some of the most coveted suburbs of Boston as well heading into the Christmas season, Wendel found in another review.
Meanwhile, overall holiday sales season activity is up – and up big time.
Pending sales of homes hit record levels in November across Massachusetts, rising by more 18 percent compared to November 2012, the Massachusetts Association of Realtors recently reported.
If nothing else, it certainly is an encouraging way to wind down a banner 2013.
But as they say, past performance does not guarantee future results.
In fact, 2014 won’t come without its share of bumps, with a chronic shortage of homes for sale starting to take a toll on frustrated buyers and the agents as 2013 wound down.
“There have been some great deals to be had over the holidays and buyers are still out there, with some properties still going under agreement very quickly,” notes Lesley Palmiter at Keller Williams in Newton. “However, despite buyer eagerness and urgency, I’ve been seeing frustration by lack of inventory from which to choose.”
From Dead Zone To Bargain Zone
Seasonal patterns still rule, with a general decline in home sales activity each year as the winter months set in.
Yet the holiday sales season, when compared to those of years past, has become particularly active here in Massachusetts over the past couple years.
The 18 percent increase in pending sales in November came atop an already strong November 2012, which was up 28 percent over November 2011.
Pending sales jumped 15 percent in December 2012 from December 2011, the Massachusetts Association of Realtors reports. (Pending sales figures have not yet been released for December 2013, but they are likely up again.)
The rise in home shopping over the holiday season coincides with the rebound in the real estate market as a whole.
During the Great Recession and its immediate aftermath, buyers could count on having a bit of leverage year-round – summer, spring, winter and fall.
Bidding wars have become more of the norm during the frenetic spring and fall sales seasons, pushing the number of listings on the market to new lows while helping drive up prices.
However, homebuyers determined to keep their costs down now are increasingly finding themselves with a narrow window in November, December and January to work within.
Fortunately, there are still sellers out there willing to play ball, especially on the luxury end of the market.
The owners of the roughly quarter of the 320-odd mansions and estates over $3 million listed for sale across the state in December were sporting discounts, according to Wendel’s analysis over at the Real Estate Café.
More than 17 percent were offering at least 10 percent off, Wendel found.
The same pattern is even more pronounced when we look at multimillion-dollar homes that were either under agreement or sold from late November to late December.
Of the 11 multimillion-dollar homes put under agreement during that period, four were on track to change hands at more than 10 percent off, Wendel reports.
When it comes to mansions that sold during the period, five of 22 changed hands after cuts in price of 10 percent or more, ranging from $355,000 to $1 million, he finds.
But the holiday season home bargains are not just confined to luxury homes.
By early December, with the holiday season in full swing, bargains could be found on a range of houses in top suburbs like Lexington, Carlisle, Winchester, Westford and Burlington, according to Wendel.
The owners of a third of all homes listed as contingent in these top towns – awaiting home inspections or the inking of a purchase-and-sales agreement – had cut their listing prices by anywhere from 5 to 18 percent, he notes.
The lively holiday sales season, in turn, likely signals another hectic year ahead in the local real estate market.
Expect sales and prices to soar this spring.
Yet as we look ahead into 2014 after a strong finish, it’s hard to ignore the growing inventory problem.
Listings are at an all-time low, roughly a third below what they were in 2012, which, frankly, was already an inventory-starved year to begin with.
Some of this has to do with a years-long drought in new home and condo construction, one that began in the early 1990s and has gotten worse by the decade.
Yet sellers aren’t fully in the game yet either, with some still waiting for even higher prices before they list their homes.
And others are taking a look at what’s out there to buy, getting discouraged, and then deciding to hang onto what they have, Keller Williams’ Palmiter said.
“Similarly, for sellers who don’t have to move … many (because they begin to search before they list their property), get frustrated by lack of inventory,” she notes. “So, unfortunately, many of these potential sellers who could contribute to the pool of homes for sale have also backed off.”
Scott Van Voorhis can be reached at sbvanvoorhis@hotmail.com.
