Home sale activity down 26% this month vs. 2021
Welcome to October! Our beautiful Fall weather is here. While we’ve all transitioned away from the Summer, so has the Boston real estate market. If you’re paying attention to the news or the financial markets you know that interest rates have more than doubled since 2021, that leads to an almost parallel increase in mortgage rates. If mortgage rates increase, the value of homes are expected to lower. Let’s see what’s going on–
Data representing single family, multifamily, and condos in Suffolk, Middlesex, and Norfolk counties from MLS
September Home Sales Slowdown
Transitioning back from the Summer and holiday benders and with homes sitting on the market longer due to increased mortgage rates, some would have expected September to have an increased pace of home sales. In fact, it seems like the reverse, home sales were down 26% versus last year, while homes that came to market were only down 3.5%. Clearly this indicates a strong loss in home sale activity, what it has also led to is a 6% decrease in price over August’s median price. Home sellers are slashing prices as the number of homes stay on the market longer.
Are we in a buyer’s market yet?
The number of homes in demand vs. the supply available for sale in the Greater Boston area has not yet tilted to where there is a buyer’s market. However, ever since mortgage rate increases began, it has been tilting more favorably towards buyers (that’s the whole point of the rate increases!). This allows a buyer to have more flexibility in their buying and offer making process. In 2021, there may have been 10-20 offers on a single family home whereas now there may only be a couple in the first weekend and that’s if the home is priced right and move in ready. Home sellers have also become more open to contingencies or buyer requests such as an inspection or addressing defects in the home. While prices have lowered and dust may be gathering at some homes, pent up demand from those who could not buy in 2021 still exists.
Recommendations if you are a buyer in this market
Plan to buy and hold your home for at least 5 years. The likelihood of recession in 2023 is nearing and it would be best to not expect having to sell your home in the near future as market conditions may be difficult.
Price your offers based on home sales from the last 3 months. You will want to factor in current home sales pricing and more recent comparables when deciding what to offer. Prices are generally increasing but at a decreasing rate.
With the number of homes on market increasing leading to options increasing for buyers, make sure to find a home that’s a good match for you.
You may want to consider a 10 year adjustable rate mortgage, which will have a lower interest rate vs. fixed rates. If you believe rates may drop again over the next 10 years you could decide to refinance at the lower interest rate. Refinancing will cost about $2000 (avg.), so it would be best to run a simple cost benefit analysis.
It is likely that you will see much of the same in October as you’ve seen in September. The market is headed for a cold winter. For buyers waiting for the right moment, this could be a good time to buy.
Please reach out with any questions or comments! We would love to hear from you!
The Nuhom Team