The numbers aren’t all in yet, but it seems safe to say 2017 was a good year for residential real estate in Massachusetts. Historically low inventory and interest rates translated to high prices and fast, strong sales numbers, pleasing most sellers and agents. Buyers, on the other hand, found high prices and stiff competition.

For real estate agents and brokers, the biggest determining factors in the market this year was high demand and low inventory, said Anthony Lamacchia, broker/owner of Lamacchia Realty.

“There are about 13,000 homes for sale in Massachusetts right now,” Lamacchia said. “That’s just over 7 percent less than there was a year ago at this time and that was down from the year before. We’ve been in this cycle for four years now. Next year will be worse, with more stress for buyers, sellers and Realtors.”

Demand for housing in Greater Boston is going to continue to drive the market, he said.

“It’s not that people aren’t listing, the listings are just getting eaten up by buyers,” Lamacchia said. “People are scared to take the leap of faith and put their house on the market until they find the place they want to move into. The average person can’t afford to buy without selling and they don’t list because they don’t see what they want. It’s a vicious cycle. When buyer demand backs off, houses won’t sell as fast.”

Increased home construction is the one thing that could bring the market back into balance, he said, castigating municipalities for enacting restrictions on zoning and building that make it too difficult and expensive for builders to create enough housing to keep up with demand.

Sale prices in many Greater Boston communities have shattered previous record highs this year, leaving many to wonder if prices could be topping out. Lamacchia said there’s still room for price growth even in a market like this.

“With the economy the way it is, I don’t see it falling down and buyer demand decreasing,” he said. “I think there’s more room for growth. There are 50 interested buyers for every house there is for sale. Even if that number were cut in half, there’d still be 25 buyers for a property.”

Lamacchia said this fall was a bit slower than he expected, in part because of uncertainty over the new tax plan being deliberated in Congress. Talk of lowering or even eliminating the home mortgage interest deduction and other tax incentives to homeownership left some buyers, especially buyers on the margins, feeling insecure.

“I think that over the last couple of months, there have been some people who have held back because of the tax bill,” Lamacchia said. “When that’s all done, it will give people more comfort. The talk and the media hype had a little impact on the market this fall.”

MBA Expects The Good Times To Roll On

In its October 2017 forecast, the latest one available, the Mortgage Bankers Association predicted refinance activity to decline as interest rates increase, but predicted an increase in purchase activity that would largely offset that drop.

“We are projecting that home purchase originations will increase at a faster clip in 2018, nearly double the rate that they increased in 2017,” the statement reads. “Purchase originations are expected to increase to $1.2 trillion in 2018 from an estimated $1.1 trillion in 2017. In contrast, we expect refinance originations will decrease by 28.3 percent from 2017, to approximately $430 billion, as mortgage purchases continue to increase.”

The MBA is forecasting good news regarding mortgage interest rates as well, with slow, steady increases in the near term, and said that new HMDA data releases show 2016 to have been an even better year than previously thought.

With a strong and growing economy and credit becoming increasingly more available, the MBA expects more young people to be drawn into the market, boding well for 2018 and beyond, though the forecast does contain a significant hedge:

“We see a number of factors that could impact our forecast positively or negatively, such as changes in Fed leadership, escalation of the North Korean conflict and other global crises, public policy implementation (tax reform and infrastructure spending), and regulatory changes that would further impact the mortgage industry and how lenders do business,” the report said. “Our base forecast presented here does not include these factors explicitly, but we will adjust our outlook accordingly when we do have sufficient information and data to incorporate these effects into our models.”

Leveraging Tech To Compete

The MBA’s predictions are pretty much in line with what David “Laz” Lazowski, regional senior vice president at Fairway Independent Mortgage, expects to see in 2018. But if originators are going to keep up with the expected growth in purchases, they’ll need to leverage technology to speed up approvals without sacrificing quality or care in the underwriting.

“We’re seeing technology that is designed to enhance the customer experience,” Lazowski said. “It’s becoming much more consumer-driven. That’s going to continue. Our normal turnaround times (from submittal to underwriting to approval) are 24 to 48 hours. This time next year it will be same day approval. We regularly close loans in 14 to 21 days now because the consumer is demanding that speed, especially in this market.”

The expected modest rise in interest rates won’t have a significant impact on the currently robust real estate market, he said; what will have an impact is the increasing availability of credit enabling younger borrowers to buy homes.

“We’re absolutely seeing more and more Millennials educating themselves and buying homes,” Lazowski said. “They are very engaged in planning earlier in the process. We’re seeing a much more responsible approach to homeownership. They figure out the money first, before falling in love with a property, unlike previous generations. They’re so research-oriented.”

New construction and foreign investment will fuel growth for the foreseeable, he said.

“There are more and more new homes being built, especially downtown,” he said. “Demand is equal to six or seven times the number of units being built. We’re going to have a lot of runway for the next three to five years in Boston. Boston is the number three city in the country for foreign investment. We just hired a Mandarin-speaking loan originator.”