If you have been discouraged and retreated to the sidelines in the crazy Boston market, it may be your time to find your next home. The summer market was down from 2017, with August sales being down just over 1% in the area from the same period. Days on market for a property, or days until offer, have grown just slightly as well. You may even notice homes that have had recent price adjustments.
What does this mean for buyers out in the market? It means there are less frenzied open houses where you need to essentially sell your soul and risk your life savings to get your offer accepted. When this type of shift has occurred in the past, and inventory starts to balance out to demand, we find financed offers with home inspections to be quite normal. A balanced market gives buyers the opportunity to make a second visit to a property of interest. A balanced market even allows buyers the ability to protect themselves within the context of their offer while still remaining competitive with others.
We all know that prices couldn’t continue to rise dramatically week after week, and you will see properly priced homes selling in a few days after their initial weekend. You may still find homes that are priced aggressively result in multiple offers, leading the final sales number to a market derived price.
What has caused the tension to prices and days on market? Mortgage rates and affordability have lead to a stabilization. When the mortgage rates rose over the last year it takes away a little of that price increase we may have seen as a result of the frenzied spring market. A simple way to look at it is: if you could afford a $500,000 home last year and you still make the same, then you can afford a $463,000 house this year when calculating the average mortgage rate increase. This past spring we saw prices increase by 8.3% over the same period in 2017, but the summer and now the fall market have already started to show some of that increase pull back. A house that sold for $500,000 last October would probably sell for $500,000 this October if you take everything into consideration. If we adjust for affordability and rate against the rise based on sales figures, we have a modest 1% price appreciation. Do we know if we are at the top of the market or a bubble about to burst? No one can say for sure. However, the Boston real estate market does have the solid foundation of employment and population growth to likely remain stable while other markets may take a harder hit as a result of the recent rate increases. Local figures and activity suggest a stabilization and only with marginal amounts of adjustments. Many news outlets have recently covered the shifts in areas like Seattle, San Francisco and San Diego while highlighting national figures that make for catchy headlines. When following the market make sure you take into consideration the local market may differ vastly from the national market.
If you have pulled back from your search because you became frustrated, this fall market could be a perfect time to jump back in. If you already own and have been thinking about selling you may need to set realistic expectations and understand that the market is always evolving and the guidance of an experienced local agent can’t be beat!