I called the Greater Boston real estate market several weeks back, but nobody picked up.

I wanted to get its thoughts on the bump in mortgage interest rates that started in May, when, according to Freddie Mac, the monthly average commitment rate that had hovered between 3.41 percent and 3.57 percent from January through April, jumped to 4.07 percent. I wanted to know if the interest rate change had affected the local demand for housing. Apparently, however, the market was spending its July 4 on the Vineyard and was unavailable for comment.

Later, in July, the rate hit 4.37 percent, the highest monthly average rate since July 2011. “Er,” I muttered as I recalled that the July 2011 housing market was a market that looked like it had been managed by Bobby Valentine.  I tried calling the Greater Boston real estate market again, but was told it left early to attend a Boston Pops concert in Tanglewood.

In early August, trying to piece some transactions together as an agent, I had the feeling that like the weather, the market had also changed. It wasn’t blistering hot. Sure, some days it was hot as a nine-offer, new-to-market listing, but some nights it felt a bit cool, like sweatshirt weather or 30 days market time. I put a six-pack in my car and headed over to the Greater Boston real estate market’s primary residence. I figured my friend since 1995 wouldn’t be able to resist kicking back a few beers and doing what we like to do most, talk about the market. Only, when I got there, there was a sign out front that said “Gone Fishing.”

I was a little nervous, but why? I had seen a lot of really good real estate news in recent months.  In mid-June, the Massachusetts Association of Realtors (MAR) reported that more homes had been put under agreement in the month of May than in any month since January 2004 and any month since they had been keeping track. Not surprisingly, two weeks later I learned that “Mass. May home sales were the highest since 2006.” But what had happened since that banner month? For the most part, I felt that the real estate headlines I was seeing veered away from record breaking news and seemingly concentrated on new development efforts and high profile acquisitions. Sure, folks did talk and write about improvements in the Boston real estate market (myself included). Yet, I couldn’t help but think about the chart I used to have on my office wall. That chart showed the year, average interest rates and total transactions. There seemed to be an inverse relationship. The higher the interest rate, the fewer the transactions. The lower the interest rate, the greater the transaction count.  I couldn’t help but wonder, “Even though rates are at a real low comparative rate, would the bump in interest rates knock the sales pace off track?”

The Analysis

I decided to do my own analysis. Like a pilot doing his pre-flight cross check, I looked at what I considered various indicators of the market as if they were dials on my dashboard.

The first thing I looked at was over-ask offers, the most unusual aspect of our spring market, and a clear indication we are in an up-market. For the most recent closings in nine key condo markets (Aug. 1-15) – which includes Back Bay, South End, South Boston. Jamaica Plain, Brighton, Charlestown, Brookline, Cambridge and Somerville – 54 percent sold for more than the list price. In any market prior to 2013, one word could be used to describe that ratio: unbelievable. Nonetheless, it was just a speck off the wicked awesome results of July, in which nearly 56 percent of closings in nine key condo markets went over ask.

Then, I checked the “on-market” inventory for the nine key condo markets. On Aug. 19, 23 percent fewer condos were on market in the nine key markets, than on Aug. 19. On the surface, nothing to worry about, but I noted that for much of 2013 the inventory in nine key markets had been down significantly more, 40 to 50 percent. Even two months ago, on June 19, 52 percent fewer condos were on-market in the nine key markets than on June 19, 2012. The lack of inventory is a market characteristic that spurred bidding wars and price appreciation. I woke up that night wondering what would happen if inventory popped a little more? Could we could find ourselves in a neutral market?

The next thing I looked at was under agreements, which in my opinion is kind of the pulse of the market. April’s under agreements ran 19 percent higher than April 2012. And not only did May set a record in Massachusetts, but in the nine key markets under agreements were 17 percent higher than the previous May. June, however, sang to a different under agreement tune, just 3 percent higher than June 2012. And July? According to my review of MLS, July 2013 under agreements were 16 percent below July 2012. What? Worse than 2012? That was a phrase I hadn’t uttered in some time. That’s not all, in the first half of August, 39 percent fewer condos went under agreement in the nine key markets than the first half of August 2012. If all these trends continued, I wondered how many buyers and sellers might have missed the opportunity boat. I would have asked the Greater Boston real estate market the same question of course, if word hadn’t got back to me that he was out jet skiing. 

David Bates is a broker with Gibson/Sotheby’s International Realty and author of The Bates Real Estate Blog, www.BatesRealEstateReport.com.