With the spring real estate market right around the corner, many are waiting on tenterhooks to see whether improving public health data will relieve pressure on inventory, and thus on prices.
The most consistent trend in Massachusetts’ for-sale housing market over the last 12 months has been the sheer lack of homes for sale. The pandemic created substantial shortfalls – 8.1 percent fewer homes listed on the Bay State’s MLS systems in 2020 compared to the prior year according to the Massachusetts Association of Realtors, even as the total number of homes sold grew 3.9 percent, according to The Warren Group, publisher of Banker & Tradesman.
Homeowners who would typically downsize were alternately scared away from senior living facilities, where COVID-19 was running rampant, or reluctant to coop themselves up in a smaller condominium. Other potential sellers were hesitant to jump into the market out of fear they wouldn’t be able to find a new place to live, even as tens of thousands of Millennials with growing families decided the lowest mortgage interest rates ever seen made 2020 the perfect time to look for a larger house.
As of this writing, final numbers of new listings posted in February were not available, but January’s numbers were not encouraging. MAR reported last month that 17.1 fewer single-family homes hit the market statewide that month than in January 2020. The numbers were somewhat better in Greater Boston, with the five-county metro area seeing only a 5.5 percent year-over-year drop, and in the Pioneer Valley, with a 10.8 percent drop. Cape Cod, however, saw a whopping 42.2 percent drop in new single-family listings even as mortgage rate lock data analyzed by Redfin last month shows demand for second homes is still off the charts relative to pre-pandemic times.
Cheap loans have helped more than a few buyers win bidding wars – after all, what’s an extra $10,000 when your 30-year interest rate is 2.7 percent – but the steady downward slide in rates that lubricated the 2020 market and its month-over-month price jumps could be over. Inflation worries sent a jolt through the mortgage market last week, pushing the average rate on a 30-year fixed-rate loan up to 2.97 percent, according to Freddie Mac.
Some Boston-area brokers say they are confident this spring will see much looser market conditions. More homeowners have been inquiring about how much their home is worth and whether or not this is a good time to sell, they say, the initial step towards actually going on the market.
We hope they’re right. Even with interest rates this low, a second year in a row where home prices rise by double digits would not signal a healthy market. With housing production still as low as it’s ever been in Massachusetts and reforms to fix that only in their infancy, the only source of market stability will be those once-reluctant sellers finally deciding to pull the trigger.
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