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It’s a real estate market that makes sense and no sense at the same time.
As it has in recent years, the number of homes for sale in Massachusetts continued to decline this past spring, falling by about 25 percent both in May and through the first five months of the year.
One might think that would give the dwindling number of sellers that much more power in housing transactions, based on the basic laws of supply and demand.
But housing prices have only been, at best, tepid this past spring, with single-family median home prices falling by 0.2 percent in May (to $589,000), compared to a year ago, and rising only 1.9 percent year-to-date through May (to $540,000), compared to last year, according to the latest statewide data from The Warren Group, publisher of Banker & Tradesman.
Roughly the same pattern holds true for condo sales, though the median year-to-date price for condominiums did rise by 3.3 percent to $500,0000 this past spring.
What’s going on?
Most real estate experts believe that a unique confluence of factors is at work, including the recent rise in interest rates leading to a slight slackening of demand combined with potential sellers becoming more cautious about selling their homes in the current market.
No matter what the causes, real estate agents say they’ve learned some lessons this past spring. Some of the lessons learned are new, while others are new twists on old lessons learned.
Following are some of those lessons learned from this past spring, as told to Banker & Tradesman by industry players.
Disappearing Seasonal Cycles
It’s been noticeable for a few years now, but it became abundantly clear this past spring: Seasonal sales patterns just aren’t what they used to be.
Seasons that aren’t supposed to be busy are busier (such as winter), and seasons that are supposed to be busy are less busy (such as this past spring).
Amy Mizner, a luxury agent at Gibson Sotheby’s International Realty focused on the MetroWest market and, with fellow team member Will Montero Boston’s Back Bay, said national and international politics and major economic events are driving the change in seasonal sales. The rise of remote working has also played a role.
But the main culprit is the lack of housing supply – and how it forces potential homebuyers to be on constant year-round alert for real estate deals, she said.
“The seasonal cycles have definitely changed,” she said.
Price It Right
Maggie Tomkiewicz, of Gibson Sotheby’s International in South Dartmouth, said it’s especially important in today’s constantly shifting market to try to price a home right – and this applies to both sellers and buyers.
As for sellers, she said they need to understand that this isn’t a red-hot seller’s market anymore. Shooting for the moon, in terms of setting an asking price, will harm a potential sale.
Bottom line: Potential buyers these days can and will walk away from an overpriced property.
“If they overshoot in price, the house will sit on the market,” Tomkiewicz said of sellers. “And if it sits on the market for a couple of weeks, it usually means you really overshot.”
As for buyers, they may need to bid higher than asking prices in some cases, but they shouldn’t overbid.
Prices are moderating these days – and buyers should take advantage of that development if possible, real estate officials agree.
Best Products Still Sell
A few years ago, buyers weren’t as choosy when it came to buying homes in a highly competitive market. They seemed to take what they could get.
But demand has ever-so-slightly softened of late – and buyers are a tad bit more picky about asking prices, the location of homes, and the design and conditions of homes, says Sue Hawkes, managing director of The Collaborative Cos., known for handling sales of high-end new condos in Boston.
“They have to be well-priced and well-designed,” said Hawkes of units for sale. “They have to be in the right location. When the market is frothy, these things don’t matter as much. But these things are more apparent and important in a tight market like we have today.”
Interest Rates Are Higher. Deal with It
Leading Edge Real Estate agent Alison Socha, the current president of the Great Boston Association of Realtors, said she believes more buyers will return to the market if interests rates start to fall soon, from the current 6-plus percent to perhaps 5 percent.
But one thing is clear: Interest rates won’t be falling back to their previous lows of around 3 percent.
As a result, she said buyers have to adapt to the fact that interest rates will remain higher than they have been in the past.
“We need a little bit of a mindset shift,” said Socha, a Realtor at Leading Edge.
Rise of ‘Whisper listings’
Gibson Sotheby’s Mizner says she’s seeing a rise in so-called “whisper listings,” or sellers who quietly put their homes on the market, via exclusive deals with agents.
The goal: Sell a home to “serious buyers,” who sometimes might be asked to extend closing dates, such as from a 30-day close period to 90 days or more. Mizner said some sellers also ask to close deals – and then rent back the abode.
As for ‘whisper listing’ buyers, they have to prove they’re financially serious buyers, via cash on hand or solid loan deals.
“They have to be ready, willing and able buyers,” Mizner said.
Home Inspections Make a Comeback
During the red-hot real estate days of yesteryear, some desperate buyers would often forgo home inspections in order to make deals more enticing to sellers.
With the market moderating of late, waiving home inspections is no longer as prevalent, real estate officials say.
“Home inspections have become more common again,” said Mizner. “I say ‘buyer beware’ if a Realtor recommends waiving an inspection in order to buy a home. Building inspections are important and people shouldn’t be waiving their right to have one in this market.”
