Posted on May 19th, 2014
The latest information from the Housing Market in Eastern Massachusetts shows lack of properties for sale and buyers hoping to see some increase of inventory during the spring selling season which would result in some price drop and less severe bidding wars.
According to information from the Massachusetts Association of Realtors and Warren Group, the state has been suffering from a lack of properties for sale and its consequences for over a year. The last 24 months brought the inventory down (including the peak drop of 19% in February), while the median price of the properties has been rising for the last 28 months. On the other hand, the lack of sellers has naturally resulted in the decline of sales in the past three months.
Most affected from the tight inventory in Massachusetts have been the neighborhoods in Boston and those areas where the midpoint prices have gone significantly higher than in 2005. According to specialists, the bidding wars are more than severe and homes are sold for far more than their actual value.
As for the reasons for the tight inventory, they are a couple. Firstly, despite the increased population of the country, the building of new homes has declined. Meanwhile, not all areas have reached the prerecession home values, so a lot of owners are afraid of selling their property at a loss. Another problem for home owners is that they may not be able to find a new home after they have sold theirs.
It appears that Boston is not the only region with a tight inventory – the same goes for places like Andover. According to the specialists, buyers need to go even further north, west or south if they want to find a home. The reason is the recovery of the housing market prices – according to the Warren Group, the median price in the end of year 2013 have been higher than the original prerecession ones in 30 neighborhoods around Boston. The Realtors Association says that some of these communities can be characterized with really tight inventories. Examples are Cambridge with 65% property decrease and 28% median price increase over the last year; Somerville with 20% less houses and 26% higher prices (since prerecession times); and Newton with 30% drop in inventory and 17% increase in prices.
As for Boston, the statistics show that the listings are 26% less from the previous years, while some of the areas are characterized with solid raise in prices. In year 2013 South Boston had already recovered from the recession and topped the prerecession median home price with 27%; the figure is 26% for Jamaica Plain, while Charlestown scores the modest 20%.
According to Paul Yorkis from Patriot Real Estate Inc, Medway is not suffering from the same frenzy in buying like Boston, where the bidding wars have reached their peak. Medway still has to cover 15% from the prerecession median home price, while Haverhill has 20% to go. Even affluent places like Wayland and Sudbury are still below the prerecession price, with 0.5% and 8.4% respectively. According to Yorkis, areas outside Route 128 are recovering, but slower than the immediate Boston communities.
According to MAR, the listings for single-home families jumped up with 4.3% in February, but the listings of condos fell down with 3.6%. The general hope among real estate agents is that the improvement will result in more sellers and more listings, thus creating a fine balance between supply and demand.