iStock illustration
The Massachusetts residential real estate market continued to be dominated by a lack of inventory and price increases in 2024.
Through Nov. 31, 38,329 single-family homes were sold according to the latest data from The Warren Group, publisher of Banker & Tradesman. The median sale price eclipsed $600,000 reaching $615,000 across the commonwealth.
Interest rates continued to be a major drag on buyers’ and sellers’ decision-making. Cuts came in September but failed to have a meaningful effect in producing new supply. Households who purchased homes with the extremely low mortgage rates of the COVID-19 years still felt the lock-in effect while prospective homebuyers appeared to lunge for some relief when mortgage rates fell in the lead-up to the Federal Reserve’s September rate-cut decision.
As state and local officials attempt to grapple with its affordability issues by generating more housing construction, lenders are turning to down-payment programs as a possible solution, especially for first-time homebuyers. Massachusetts Housing Partnership, along with the state government, The Boston Foundation, and Eastern Bank partnered to create the ONE+ mortgage just before Thanksgiving, adding to existing programs offered by MHP and the state’s other quasi-public housing finance agency MassHousing. The ONE+ product combines a heavily discounted, fixed-rate 30-year mortgage with up to $50,000 in down payment and closing cost assistance.
Realtors also had to deal with nationwide industry upheaval in the wake of the National Association for Realtors settlement, which went into effect in August. Changes to how commissions are paid forced buyers and brokers to adapt. Mortgage providers adapted, too: Leader Bank launched a new product that allowed homebuyers to finance their brokers’ commissions, just as those commission changes were going into effect.
While some brokerages were successful enough to grow, with the likes of Lamacchia acquiring Berkshire Dream Home and completing its statewide footprint, the same can not be said for other brokerages who were forced to sell or saw their profits take a hit as transaction volumes continued to stay low. The same dynamic also hurt mortgage lenders: HarborOne Mortgage saw its profits take a big hit to start the year reporting a net loss of $7.1 million compared to the net income of $8.4 million in the previous quarter.
As the calendar turns to 2025, there will be more challenges ahead for buyers and brokers alike, and the Fed’s now-cooling ambitions for interest rate cuts have created uncertainty about how many homeowners will be interested in listing once the spring selling season arrives.
