If you’re looking for a Realtor these days, you may want to head for a post office – they’ll be in there slapping up wanted posters, because it seems like sellers have gone on the lam.
Residential inventory in the Bay State hit its lowest level in a decade in January, and the Greater Boston area is the center of the problem. Data from MLS-PIN, the state’s largest multiple listing service, and the Massachusetts Associate of Realtors, show that the statewide inventory of 15,246 homes on the market in January was the lowest seen since December 2005, near the peak of the Bay State’s housing boom.
The situation is particularly bad near Boston, where some agents describe looking for homes for buyer clients in some of the most popular price ranges only to find half a dozen listings on offer – or fewer.
The inventory crisis may be particularly surprising in the Bay State, where single-family home prices have soared more than 10 percent in 2013. About 10 percent of Bay State homeowners are underwater, according to reports from CoreLogic and Zillow – well below national averages.
But the strengthening market simply failed to draw sellers off the sidelines. A variety of causes are suspected, from the terrible and prolonged winter weather to rising interest rates making listing less tempting. But some observers don’t think that’s enough to explain the listless state of the sell side.
Can’t Move Up, Can’t Move Out
Interest rates “could be a factor, but if it is, I think it’s only a psychological factor; I don’t think it’s real. It’s $57 per $100,000 increase in financing. For a 300,000 at $1,347 a month, you’d pay $173 a month more now, because of the increase,” said Amy Tierce, regional vice president of Fairway Independent Mortgage in Needham. She says that’s not enough to dissuade potential sellers, given the increasing buyer demand.
Many agents point to one significant problem: A logjam at the move-up buyer level, where potential sellers are held back from listing their own homes because they can’t find a new place to purchase.
“Would-be sellers, who have the desire and need to move, can’t put their homes on the market until they secure a place to move to,” said Judy Goldfarb, a Coldwell Banker agent based in the Back Bay. Right now, the market is moving so fast “some folks can’t get out of work during the week, and can only see them on the weekends, and by then they’re gone. It’s a stressful situation – people are unable to secure housing and discouraged by the bidding wars.”
There’s also a strain of caution in today’s market that may be holding people back. Many agents say that even in the current market, where bidding wars are frequent and a well-priced property can be snapped up in days, if not hours, over-priced properties still linger. So long as prices are rising, sellers may simply be more comfortable taking a wait-and-see approach.
“The way the markets are moving, the way demand is so strong, particularly in Eastern Massachusetts – what’s the rush? I can wait until the end of April, and the way the markets are moving, I can ask for more than I could in February,” said Rich Goulet, president of Belmont-based The Appraisers Group.
The longer sellers stay on the sidelines, however, the tougher it gets for agents. While top listing agents are busy, buyer agents are often frustrated and stressed, and many are scrambling to find more listings. Goulet says he’s even had agents approaching him asking for leads.
A Savior In New Construction?
In some markets, new construction is providing an outlet. For empty nesters looking to downsize into a city condo, there’s plenty of new construction coming online – if buyers can afford to wait.
“The wait can be six months, eight months, sometimes a year – but then you can put your home on the market. You have time to clean it up, stage it. For those of my empty nesters who are moving in from the ’burbs, it’s been a Godsend,” said Goldfarb.
In many near-suburban markets, however, with little available land and lengthy and contentious permitting process, agents see little hope of new construction taking the heat off.
Some say it’s time for the industry to take a more active role in bringing sellers to the table. “I think we need to be focusing on educating the sellers,” said Tierce. “We spend a lot of time educating buyers. If Realtors can get really creative in terms of working with sellers,” we could break the log jam. She added that many potential sellers aren’t fully aware of their options in terms of extending closing dates, or that they may qualify for bridge loans, or be able to negotiate with buyers to allow them enough time to complete their own new purchase.
Email: csullivan@thewarrengroup.com
