The median pending sale price for a single-family home statewide in May rose over $400,000 for the first time this year, and the third time in the last 12 months, the Massachusetts Association of Realtors reported early this month. 

For closed sales in the month, The Warren Group, publisher of Banker & Tradesman, reports a median sale price of $394,000 for the month, a 6.5 percent increase over 2017. The number of single-family homes sold was down 2 percent compared to May 2017. 

People are quick to declare a bubble forming, but if we could see them, we could prevent them. Partially that panicked response is from a traumatized generation that had never seen a recession and are indelibly scarred by the most recent one. And while the Great Recession remains bright in consumers’ memories, it must be noted that it ended almost a decade ago. Ten years is long time in a housing cycle. 

But this isn’t a bubble. The extraordinary price appreciation in Greater Boston isn’t due to predatory lending or derivative swaps or robo-stamped mortgage applications. Unless something super shady is going on in the nation’s banking industry that has managed to escape the notice of some very dedicated watchdogs, the area’s prices are based on one of the oldest of economic forces. 

MAR also reports a continued trend of reduced inventory – in April it had dropped for 74 of the past 75 months, or more than six years of dropping inventory rates. However, MAR also notes consistently higher year over year listings. 

That means there are actually more houses coming onto the market, but they are purchased much more quickly than in years past. 

Supply and demand is a simple enough concept and it should be simple to bring balance back to the scale – but this is Boston and nothing is simple. Still, that is what is at the core of our insane local market. There may be more houses (and condominiums) coming online every month than has been the case in recent years, but it is nowhere near the number needed to satisfy hordes of hungry homebuyers. 

“You can tell it’s officially spring when new listings start to pour into the market,” 2018 MAR President Rita Coffey, general manager of Century 21 Tullish & Clancy in Weymouth, said in a statement. “Still, buyer demand is so strong that new listings are only part of the solution. We need new construction to really satisfy our inventory problem.” 

Indeed. 

MAR took to Beacon Hill earlier this month for its annual advocacy and lobbying effort; one of the association’s major concerns was housing production. It’s a noble goal and one that should not be abandoned; our elected officials should realize the seriousness of this situation and act accordingly, but they probably won’t. 

So don’t call it a bubble, because it’s not. This is the reality of the Greater Boston housing market, and we’d all better get used to it.