Where is the housing market headed? After all the data from the chaotic spring selling season is in, we are left to read the tea leaves and what they might suggest about the fall market’s direction. A few patterns seem to be emerging out of recent market data.
One thing’s for certain: We have at least one more full season of the underlying conditions that helped power one of the biggest and fastest run-ups in prices in recent memory.
With something like 55 million Baby Boomers and 62 million Millennials in America right now, there are not one, but two “pigs in the python” of buyers looking for homes. This demographic reality won’t be leaving the market any time soon, least of all in a place like Massachusetts.
For all the talk of remote work freeing office workers from their desks, the reality is only about 35 percent of jobs were ever done remotely at some point in 2020, according to the Bureau of Labor Statistics, and most workers are back to being on the job in person. And with still-vibrant and growing industries – growing explosively, in the case of biotech – there are plenty of people of prime homebuying age who aren’t poised to up stakes and head to Texas or Florida.
August sales statistics have some concerned that after years of anxiety about housing affordability, the state’s single-family prices are finally too high for many to afford.
The number of single-family homes sold statewide dropped year-over-year in August compared to the same month in 2019, according to The Warren Group, publisher of Banker & Tradesman, making for the second straight month of declines. This comes as total and final days on market crept up slightly from June to August and the number of new single-family homes listed through Aug. 31 is 7,584 off where it was at the same time in 2019, according to the Massachusetts Association of Realtors.
At the same time, as Scott Van Voorhis writes in this week’s issue, urban condominium markets are going strong. This is in line with anecdotal evidence Jay Fitzgerald reported in last week’s issue that some buyers have turned to that historically less expensive home type.
A significant uptick in purchase mortgage applications at the national level, reported by the Mortgage Bankers Association, could signal that we are in for another heated market this fall, though. And MAR reports that both the average condo and single-family seller got more than 100 percent of their asking price in August, albeit slightly less than what they received from July’s closed sales.
Only time will tell where the market is truly going, but with interest rates set to stay ultra-low for months, don’t be surprised if we see yet another red-hot homebuying season to close out 2021.
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