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Some of the lowest inventory numbers on record. Anemic numbers of new listings. Price jumps keeping many buyers and sellers locked out of the market. Mortgage rates higher than at nearly any time in the last 15 years. Worries about a recession in the wind. 

On its face, it’s hardly a traditional recipe for a competitive spring market with solid buyer demand, but that’s where many market observers believe Massachusetts is headed, thanks to how those same high interest rates have stabilized in recent weeks. 

“You had a lot of people boxed out of the housing market in 2020, 2021, 2022. But their life kept moving. The need is still there,” said Shant Banosian, a Belmont-based loan originator with Guaranteed Rate. 

As the spring market got underway last month, agents and brokers said well-priced homes began attracting the type of attention not seen in months. 

“I had a couple buyers looking at open houses this weekend [March 18-19], one of whom said, ‘Getting into this house is like a nightclub. The lines are so long,’” said Meg Steere, a Watertown-based Realtor with BHHS Commonwealth Real Estate. 

Stabilizing Rates Gives Some Confidence 

For the last several months, market-watchers cautioned that homeowners this spring would be facing stronger buyers than their neighbors who sold in 2020, 2021 or 2022. Many buyers had paused their home searches last fall as average mortgage rates rose above 7 percent, experts said.  

According to calculations by economists at listings portal Zillow, the monthly mortgage payment on the median-priced Greater Boston home was up 69 percent year-over-year, assuming a 20 percent down payment, in October 2022. 

“People buy on payments – the interest rate clearly affected that to a great extent, and that’s where the rubber has met the road for a lot of buyers,” said Alison Socha, a Realtor with Leading Edge Real Estate in Melrose and the 2023 Greater Boston Association of Realtors president.  

But rates have since stabilized, with the average on a 30-year, fixed-rate loan dropping modestly from its November 2022 high and oscillating in the low- and mid- 6 percent range according to mortgage buyer Freddie Mac. That’s given buyers who can still afford to be in the market a feeling that rates have found a “new normal” for the time being, Banosian said. 

“A lot of these clients, the common consensus seems to be that rates are going to go down next year. A lot of people seem to be figuring that even if rates are high right now, they can refinance down the road,” he said. 

It’s also given loan originators opportunities to entice buyers off the sidelines by pointing to falling rates. Listings portal and brokerage Redfin released data from its in-house mortgage company last month that showed, as rates entered their latest downswing following Silicon Valley Bank’s collapse March 10, nationwide purchase loan applications rose 7 percent week-over-week. And data from ShowingTime released as part of Redfin’s report showed home tour activity jumped 19 percent. 

“We’re seeing houses that are optimally priced and ready for show, they’re seeing action and competition,” Socha said. “If a home isn’t very well updated, it’s going over [asking price] but not to the extent we were seeing in last year’s spring market.” 

That dynamic is reflected in market data. Of the 7,279 single-family and condominium homes for sale within the Route 128 corridor, plus MetroWest, the North Shore and South Shore between Jan. 1 and March 27, only 11.11 percent saw their prices cut at least once according to listings service MLS PIN. That’s up from 6.64 percent of listings in the same period in 2022, but below the 14.69 percent share seen in 2019. 

In the Worcester region covered by the Central Massachusetts Association of Realtors, MLS PIN data shows, the picture was similar: 11.14 percent of listings with price cuts so far this year, compared to 6.52 percent in 2022 and 17.08 percent in 2019. In the Pioneer Valley, 15.63 percent of listings had price cuts, versus 9.23 percent last year and 20.75 percent in 2019. 

Inventory Drivers Point Low 

But the calmer interest rate environment isn’t translating into the kind of substantial increase in home listings that would help bring the market back into balance.   

“First-time homebuyers are still struggling,” said Larry Rideout, chairman of Gibson Sotheby’s International Realty. “I feel bad for them. It’s a hard battle to fight.” 

MLS PIN data shows the number of homes listed in the Boston area between Jan. 1 and March 27 are down 18.46 percent year-over-year. Worcester-area condo and single-family listings are down a combined 20.31 percent. And in the Pioneer Valley, they’re off 24.54 percent.  

Some owners who might otherwise move in search of a bigger home are having a hard time finding a home that fits their needs at a price they can afford, Banosian said.  

“It’s tricky to manage the timing” of a sale followed by a purchase, he said, with many homeowners relying the equity in their current homes to fund their next down payment. 

With interest rates appearing to stabilize, more buyers are poised to come off the sidelines, real estate market observers say, buoyed by confidence that rates will fall in the future. Image by Andrii Yalanskyi | iStock

And with mortgage rate-locks typically lasting only 60 days would-be buyers, many who are also sellers, are put under significant pressure, said Keller Williams Boston|Metro operating partner David McCarthy. 

Limited numbers of condos and single-family homes for sale could help push prices up modestly, Banosian said, by as much as 4 percent to 5 percent. 

“[Mortgage] rates have already peaked and will be trending downwards. That creates more affordability,” he said. “There’re no mortgage defaults. There’re no foreclosures. There’s nothing putting pressure on prices on the way down.” 

These indicators point towards a spring where many buyers may feel forced to waive contingencies again, after a fall and winter full of buyers making offers that required home inspections, BHHS Commonwealth’s Steere said. 

Lack of Construction, Older Sellers Blamed 

The inventory picture could improve in the coming weeks as sellers waiting for the “azalea factor” bring their homes to market with gardens in bloom, Leading Edge’s Socha said. But the state’s multi-decade-long shortfall in homebuilding won’t let any such uptick fix the market in a single season or bring prices more in line with what many might consider reasonable or even attainable. 

“When I’m seeing folks pausing, it’s the value proposition but also, where are they going? We don’t have the housing for those folks to get to,” Socha said.  

Many market-watchers are also pointing the finger at older homeowners who, pre-pandemic, would have been expected to downsize in-state or retire to the Sun Belt. Some, McCarthy said, want to stay closer to children and grandchildren. Others are finding it too expensive to buy in markets like Florida following big pandemic-era run-ups in prices there. Others don’t want to give up a large home that currently functions as a family gathering place, especially if their children haven’t been able to afford a home of their own. 

Baby Boomer sellers, Socha said, are often looking for a combination of features that are hard to find without moving long distances around Greater Boston and away from family and friends – an idea that few seem to be keen on. 

“Either they’re looking for one-level living, frequently with a garage, or they’re looking for townhouses with a primary suite on the first floor,” she said. “They want some amenities and they want to know they don’t have to deal with upkeep anymore.” 

Agents Face Test 

It’s the kind of market that’s testing agents’ knowledge and skills.  

“The expertise of the Realtor becomes critical. This isn’t a new agent’s game,” Rideout said. 

With the market shifting, he said, his brokerage spent the last several months offering trainings on a range of skills, like negotiation and home inspections, to help even experienced agents feel prepared to take on whatever spring throws at them. 

Even though strong competition among buyers appears to be returning to the market, brokers and agents interviewed for this story all cautioned that managing seller expectations will be critical to a successful sale this spring. 

James Sanna

“Some people read that prices are up 5 percent and say [to their agent], ‘Well, I put a new kitchen in, so I’m going up 10,’” McCarthy said. 

So, too, is timing when to list, he cautioned.  

“There are times when you can look at the market and realize there are no four-bedroom, center-entrance Colonials on the market. So, if you put yours on this weekend, it could move quickly because there’s always a pocket of people looking for that,” he said. 

Since so many sellers are sitting the market out, and so many people still feel priced out, finding listing clients will be tough, Socha said.  

“It’s about networking, reaching out to your client base and going back to those things you learned about being a Realtor. Building your sphere [of influence] up, treating clients well. It’s really back to basics,” she said.  

But the tough market gives agents an advantage in trying to land clients, BHHS Commonwealth’s Steere said. 

“I think that people really do need more help in a market like this,” she said. “Not like past markets were easy – they’ve had their difficulties, too – but even talking about a 2-1 buydown as an option, or walking them through ‘here’s your budget, here are the areas we can look at’ can really help.”