It is important to consider when reading this report the data is historical.
As the third quarter of the year wrapped up, single-family and condo property values held firm and even outpaced 2021 in Greater Boston. Though fewer newly listed homes in Q3 2022 translated into fewer pending and closed transactions, properties achieved higher average and median sales prices as compared to Q3 2021. Simultaneously, the market was tempered by climbing interest rates, which reduced competition among buyers and gave them back some negotiating power. While most buyers continued to pay at or over asking price for homes, they were able to land offers with more favorable terms in many cases. Compass agents reported the market felt less “frenzied” than earlier in the year.
The following observations are based on year-to-date MLSPIN data for 150 communities as of September 30, 2022.
New listings brought to market were down 9% for single-family homes and almost 16% for condos. Single-families experienced a 14% drop in pending sales and 11% decline in closings, while condo pendings were also down 21% and closings declined 19%. Despite national trends, though, prices were on the rise. Median price was up over 9% for single-family homes at $695,000 and up 7.5% for condos at $575,000. Homes continued to sell quickly, and the average days on market was down for both property types as compared to 2021.
What does this mean for buyers and sellers?
When these numbers were compiled it was still a strong seller's market. Experts say that a buyer's market emerges only when months of supply reaches at least seven months, nationally, but we have seen buyer behavior change where it seems for some properties to have tilted to a more balanced market and we have much less than six/seven months of inventory available. While there still may not be enough homes on the market to fully meet demand, the slightly larger available inventory has led to a slower-paced market where buyers have more options and have the ability to negotiate more favorable prices and terms in many instances. For buyers that have assets to help off-set higher interest rates you will find yourself in one of the most balanced market periods we have seen since we have been in the business, almost twenty years.
The days of sellers throughout Greater Boston receiving 10+ offers are gone (for now). Although some homes still receive more than one offer, the number of multiple offers dwindled in many pockets of the market. Nevertheless, on average, sellers of both single-families and condos continued to sell at prices above asking price due to strong buyer demand coupled with relatively low available inventory. It is not unusual now to see sellers negotiating prices below asking but we must remember our market went up double digits throughout the course of the pandemic.
Buyers should be prepared to compete with others for updated homes in popular neighborhoods, some of these homes are still getting top-dollar offers with few or no contingencies. Rapidly rising rates have forced many buyers to be more flexible with their location, which might mean an influx of new buyers to certain towns, making the offer game more competitive than ever. Many buyers who don't want to compromise on location or price are reconsidering adjustable rate mortgages, which offer more affordable monthly payments and the option to refinance down the road when rates are more favorable.
On the other hand, if you're planning to sell, know that sellers who are less ambitious with their asking price tend to garner offers far above those who price above comparable recent sales. As a seller, it's also important to keep in mind that rising mortgage rates have decreased buying power significantly. The rule of thumb is that for every 1% increase in rate, the price buyers can afford to pay drops by 10%. As buyers bid on properties that lack amenities that they used to be able to afford when rates were lower, they may be less emotionally involved in the bidding process and tougher to negotiate with.
Once again, the housing market on Cape Cod and the Islands offered some interesting parallels to the Greater Boston market.
On Cape Cod, closed inventory for single-families and condos were down (19% and 15%, respectively) year over year. However, median sales prices were up 13% for single-families at $689,900 and up 23% for condos at $445,000. On Nantucket, closed sales for single-families dropped by a striking 50% compared to Q3 2021, whereas the median sales price rose by 33% to $3.8 million. Martha's Vineyard single-families saw a similar trend, with 30% fewer closings but a 12.7% increase in median sales price to $1.55 million.
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MLSPIN Area Market Review, 1/1/22–9/30/22.
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The towns we used for Greater Boston stats were based on this list from Crunchbase.
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CCIMLS for Barnstable County, 1/1/22–9/30/22.
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LINK for Nantucket and Martha's Vineyard Data, 7/1/21–9/30/21 vs. 7/1/22–9/30/22.
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