Spring is generally the busiest time of the year for real estate transactions, and as such we often see trends that indicate what lies ahead for the coming months.
This year, the housing market in northeast Massachusetts got off to an fast start. According to Joe Azzolino, a broker for Berkshire Hathaway N.E. Prime Properties, “The spring market usually occurs as early as February to as late as the middle of May. This year started earlier than 2018 because of the mild winter.” This quick start could result in more sales in 2019. Note: The northeast region includes northern Middlesex County and the southern Merrimack Valley.
Fewer homes for sale. The early months of 2019 have provided home sellers with a generous flow of potential buyers amid a lower inventory of available properties than January and February of 2018. According to recent data from the Massachusetts Association of Realtors, the number of single-family homes for sale was down 9.5% from last year. That could give sellers the opportunity to leverage increased demand into a higher purchase price.
The buyers’ market is competitive. Due to the lower supply of homes, multiple buyers are making offers on the same properties. Those who will be paying for the property with liquid assets or have a loan commitment letter generally have an edge. Tip: Prequalification does not guarantee a loan commitment from the lender.
Higher-end homes are not selling as well as midpriced properties. “The higher-end homes are not moving and have suffered some price decreases thus far,” Azzolino says. “The middle of the market is selling as soon as you can get them listed.” This struggle for higher-priced homes could suggest an influx of first-time home buyers or people attempting to downsize.
The average sale price in the northeast region has decreased 1% since the same period last year. According to recent data from the Northeast Association of Realtors, the region’s overall average sale price has stayed virtually unchanged. Despite this situation, certain areas have experienced slight volatility. For example: Andover’s median sale price decreased 2.4% in January when compared with January 2018 numbers.
Overall: Mark Kavanagh, the president of the Northeast Association of Realtors and team leader of Keller Williams in Leominster, Mass., suggested the low housing inventory is partially due to strict construction laws within the state of Massachusetts. “If we sought to create a neutral housing market,” Kavanagh says, “I would begin by looking at the construction laws for single-family homes and find a way to create more opportunities for lower- and midpriced dwellings.”
The current market presents an inviting opportunity for sellers. Buyers are competing with one another because of the low inventory. More offers generate more leverage for sellers to get premium prices on their properties. Sellers should seek to accurately price their home in order to generate the most amount of interest.
That doesn’t mean buying is out of the question. Recent data from the Northeast Association of Realtors shows a 2.2% increase in single family home sales in the first two months of 2019 versus the same period a year ago. Although there are fewer homes, closings are happening at an increased rate over last year.
Kavanagh offered advice for buyers in the current market: “Recalibrate your expectations. No matter what, something must be compromised because you won’t have the leverage. Prices may be higher, or you may be farther away from your ideal location.” He believes the market will remain this way for some time.
As always, major decisions regarding real estate shouldn’t be rushed. It is a good idea to contact a professional lender, real estate lawyer and real estate agent to set the proper expectations.