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The Greater Worcester area was the nation’s most competitive housing market in May, according to a new Redfin report that measured the number of competing offers its buyers agents encountered. And Greater Boston was the nation’s third-hottest.
Eighty-one percent of the offers agents for the combination brokerage and listings portal wrote in the Worcester area may meet with at least one other offer. That’s up from 75.3 percent the previous month and 77.3 percent last May.
The Central Massachusetts hub was a contrast to Providence, Rhode Island, which sits similarly distant from and connected to downtown Boston by transit and highways. Providence posted the second-lowest competition rate out of any metro Redfin tracked, at 45.3 percent. That’s down from 74.1 percent in April and 82.7 percent in May 2021.
The shift came as mortgage rates jumped to levels not seen in over a decade, trimming buyers’ budgets dramatically. Worcester County’s year-to-date median single-family sale price sat at $380,000 in April according to The Warren Group, publisher of Banker & Tradesman. By contrast, the same figures for suburban Boston ranged from $510,000 at the cheapest, in Plymouth County, to $710,000 at the most expensive, in Middlesex County.
“With interest rates rising some buyers have been priced out for now, especially at the entry-level, but others have adjusted their search to lower price points or more affordable distant suburbs and that’s kept the competition heated and led to offers over asking price,” Greater Boston Association of Realtors 2022 President Melvin Vieira Jr. said in a statement released this week along with the group’s May sales figures.
Sharp Contrast to National Trends
Boston’s and Worcester’s markets are also sharply different from the larger national trend of a rapidly cooling housing market. Nationwide, 60.8 percent of home offers written by Redfin agents faced competition in May, and down from 67.8 percent in April of this year and 71.8 percent in May 2021.
The strong markets could also be seen in a different set of data reported by Redfin – the share of residential listings with price drops – and market data reported by the GBAR this week.
Price drops are typically a sign that a seller has overpriced their home relative to buyer demand, and before the pandemic would usually rise throughout the year as homes unsold during the spring market sought to attract new buyers during the less-intense fall market. Generally, the higher the share of homes with price drops, the lower the buyer demand in a market.
In the Worcester area, a mere 4.1 percent of active listings had price drops for the four-week period ending May 29, Redfin said. That’s up sharply from the 1.7 percent share in March, when inflation worries began putting upward pressure on mortgage rates. However, it’s a far cry from the 6 percent of listings that had price drops in Worcester in May 2019.
In the Boston metro, the share of listings with price drops jumped from 2.2 percent in March to 3.9 percent in the four weeks ending May 29. That’s compared to 6.1 percent for May 2019 and 4.7 percent for the four weeks ending May 12 of this year.
Across all metro areas Redfin tracks, however, the share of homes with price drops soared to 5.6 percent for the four weeks ending June 12, outpacing 2019 already in mid-May. Only 4.1 percent of listings in all the metros Redfin tracks nationwide had price drops for the four weeks ending May 16, 2019.
“The [national] housing market isn’t crashing, but it is experiencing a hangover as it comes down from an unsustainable high,” Redfin deputy chief economist Taylor Marr said in a statement issued Thursday. “Housing demand has already cooled significantly to the point that the industry has begun facing layoffs. This week’s rate hikes will further stretch homebuyers’ budgets to the point that many more may be priced out. While a lot of home sellers are already dropping their prices, more homeowners will likely decide to stay put now that the mortgage rate on a new home is significantly higher than their current one.”
Buyers Cram into Boston Single-Family Market
The Greater Boston Association of Realtors reported this week that Greater Boston saw a strong month-over-month uptick in buyer demand for single-family homes in May. Months supply of inventory dropped from 1.5 in April to 1.1, while the months supply of condos increased from 1.5 to 1.7.
The change came even as the region saw over 8 percent more single-family listings hit the market in May compared to the same month last year. Region-wide, 1,847 single-family homes came online last month, along with 1,686 condominiums, compared to 1,708 single families and 1,664 condos in May 2021.
The association covers most of the municipalities within Route 128, along with much of the MetroWest region between that highway and the Interstate 495 belt.
The number of active single-family listings also increased on the same basis, going from 1,261 last May to 1,339 this May, even as the number of active condo listings dropped 11.1 percent from 2,153 to 1,914 over the same period.
“We’ve seen an increased sense of urgency and a greater a desire among many buyers to be more aggressive in making offers since mortgage rates started to rise above 3.5 percent in January,” GBAR’s Vieira, an agent at RE/MAX Destiny, said. “That made for a busier than expected early spring market has given the scarcity of listings at that time, as there were a lot of buyers who wanted to move quickly before rates and prices climbed higher.”
