| The spring market is about to arrive, if not the spring weather, and it remains a good news/bad news situation.
High home prices in Greater Boston are good news – sellers who bought at the right time stand to make a pretty penny on their sales this year. That’s especially true considering the current lack of inventory. (MAR reports that December was the 59th consecutive month of falling inventory and there’s no end in sight. That’s one month shy of five years of falling inventory, and it was the lowest month in 16 years.) Of course sellers who bought at the wrong time are still struggling; the best they can do is hope for rising home prices to continue and lift them out of the weeds.
By that time, however, interest rates will have risen quite a bit, which may make a new mortgage less palatable. Rising rates, despite some recent fretting, will likely not have an outsize impact on our market – we’re not looking at double digits anytime soon.
There will be both buyers and sellers affected by it, though. On the seller side, those who bought at the bottom of the market, around 2010 through 2012, are coming up on their traditional “time to move” average number of years in their homes. But their mortgages (assuming they are fixed) are in the 2 percent to 3 percent range; for them, a jump to 5 or 6 percent is not insignificant. And so they may stay put, contributing to the inventory shortage.
On the other side, buyers who may have qualified for mortgages just six months ago may now find themselves locked out under the ability to repay/QM standards. Unfortunately for them, there are thousands more buyers behind them, hungry for the few houses and condos listed in their prices ranges.
Recent reports of a softening at the high end of rents in and around the city are also good news, as it has the potential to eventually affect the middle of the market (where most people actually live). That outcome relies on the markets continuing on their current path, which is never guaranteed.
Much like the president himself, The Trump Effect remains a wild card. Most impacts are likely to come from global markets and maneuvers – a trade war with China, for example, or new import taxes affecting the price of building materials. Direct hits could come from Boston, Somerville and Cambridge’s status as sanctuary cities; the loss of federal funding would be a serious blow to our local economy.
On the other hand, the city’s outspoken mayor’s promise to house immigrants in City Hall if needed, combined with Massachusetts’ reinstitution of Romneycare should the ACA fall, may turn our already blue state a deeper shade of navy. A flood of new residents seeking protection and health care – especially without federal funding for housing – would be disastrous for our economy. Good optics, though.
Happy spring, readers. Keep an eye on the news, Twitter and your local inventory levels, and good luck out there.
