Back again with another local market update!
The news keeps on saying the housing market is crashing/going to crash, but they’re using the entire country as the sample size, which is way too broad when real estate can change significantly state to state, city to city, even neighborhood to neighborhood.
Now that we’re in October, I figured it would be good to do another, updated dive into what is going on in our local market. All the stats I pulled are looking at August & September, 2019, 2020, 2021 and 2022 (to provide context of what previous end of summer/early fall markets have done), showing condos & single-family homes, in Boston, Brookline, Cambridge and Somerville (AKA Greater Boston), according to MLSPin.
*one quick note - for all sold statistics, these are almost all homes that actually accepted offers back in August, as it typically takes 30+ days for a transaction to close (average being around 45 days), so the sold stats will be a reflection on how summer concluded, not necessarily how fall started, those stats we’ll know next month.
For starters, let’s look at the median sold price. The median sold price from August to September did drop, and is right in line with the median sold price for last September - flat when looking YoY by the month. Note that the median sold price also dropped from August to September back in 2019, but nobody thought the housing market was crashing back then. Of the last 4 years, this has happened going into the fall twice already, both pre and post covid.
If we think back to the fall of 2019, that was a great time for buyers to get into the market. Less competition = not overpaying and actually getting homes at a discount.
We’ll keep an eye on these numbers as we move further into the fall but at the moment I don’t find this “alarming.”
The number of sold transactions is at their lowest point for a September and August, out of the last 4 Septembers. While it’s common for sales to drop (and this is closings, not offers accepted) from August to September, we are currently experiencing a bigger slowdown in number of transactions compared to the last 2 years.
Here’s probably a safe prediction - this fall/winter we will likely see lower than normal transactions happening, as many homeowners will not want to both sell their home in a softer market, as well as leave their low 3% 30-year fixed interest rate.
While many people are saying “home prices are going to fall” I predict the trend will likely be relatively flat price changes (in the short term) and lower than normal transactions overall, in the greater Boston area. In the long term, I’m confident housing prices will continue to rise. The price for condos sold in Boston over the last 15 years appreciated on average 4.6%, year over year, and that takes into account both the crash in 2008/2009 and the covid boom of the last 2 years.
Moving on…
For the homes that do sell, they tend to accept an offer after being on the market for around 25-35 days. As a seller, if you’re approaching 35 days on market and haven’t done a price reduction yet, I’d strongly consider it.
Since transactions on average take roughly 45 days to close, these numbers are really homes that accepted offers late in the summer, which is historically always slow. It’s not a shock to see a full month on market compared to the 1 week and done that we were used to seeing in the spring.
The chart above shows the price of sold homes compared to both their final asking price (after any price reductions on the market) and their original asking price. The lines on the top of the chart are showing the price compared to the last asking price, which shows that price drops can be very effective at getting an offer. In fact, after the price reduction, these sales, on average, sold at exactly their new asking price, and even many created a bidding war to go above their new asking price.
So what does this mean? If you are priced right, you will sell your home, and price reductions do work.
So how many price reductions have we had? Is it an abnormal amount that would trigger the media to predict the housing market in Greater Boston is crashing?
At the moment the number of price reductions is quite typical for this time of year, and well below the amount of price reductions that happened in 2020.
As you can see below, on average, homes are getting reduced by the largest amount that we’ve seen in the last 4 years, however, it’s by no means an extreme. As the market slows, sellers need to sometimes make a drastic price drop to stir the pot and get buyers excited again, and as you can see from the earlier chart, those price reductions can even result in new bidding wars that push the price over the new asking price.
So what does this mean?
Many buyers are taking a back seat, which can provide the perfect window of opportunity for other buyers to step up to the plate and get their next home at a decent price, not having to pay top top dollar, like back in the spring.
Is it a terrible time to sell? No, not if you’re strategic with your pricing. Clearly, we’re in a very price-sensitive market now and many homes will likely sit longer on the market going into the fall. This is not the market to list your home for your make me move number. When priced right, it will sell.
If you’re interested in discussing this further and see how you might be able to make a move in this current housing market, reach out to us today.