Average Selling Prices Remained Stable
Selling prices averaged $1.213M for the 2018 period versus $1.222M for the 2019 period (up 0.7%).
Sales Volume Dropped Substantially
Sales declined from 233 units and $282.6 million for the three months ended March 14, 2018 to 194 units and $237.2 million for the same period ended March 14, 2019 (down 16.7% and 16.1%, respectively).
Listing Inventory Increased Significantly
During the same period, the number and aggregate value of home and condo listings, commonly referred to as “listing inventory,” increased from 339 units and $514.0 million to 407 units and $606.6 million (up 20.0% and 17.9%, respectively).
Buyers or Sellers Market?
According to Jonathan Slater, President of Sequel Residential, we’re in a “slightly favorable” buyers market, pointing to an increase in the percentage of listings that underwent price reductions (7.1% to 11.8%) and an increase in days to offer (42 to 50). Still, the ratio of average selling prices to original listing prices barely moved, declining from 97% to 96% between the two periods, indicating prices have been holding strong.
“Some sellers misread the signals, especially the increase in inventory that has been occurring, and over-priced their original listings, leading to increased price reductions, but things are still moving,” Slater says. “In general, buyers who are waiting for prices to drop significantly are getting shut out. There are just too many ready, willing, and capable buyers out there,” he adds.
Stable Home Prices with Lower Sales and Increased Inventory
According to Slater, the answer to this unusual set of circumstances lies in mortgage interest rate trends during the respective periods combined with the continued healthy economy.
Last year, mortgages were rising rapidly during this period, from just under 4% in mid-December 2017 to upwards of 4.5% by mid-March 2018. “I don’t think there’s any doubt that this approximately 50 basis point (0.5%) spike in rates caused buyer anxiety and created pressure to transact while rates were still 'affordable.' Conversely, over the past three months, mortgage rates have declined by approximately 30 basis points (0.3%), closing at the historically attractive level of 4.33% this past Friday,” Slater notes.
“Last year during this period, buyers felt a greater sense of urgency. This year, buyers are more relaxed about timing,” Slater explains. “But there still are lots of active buyers in the market and overall affordability is very high, due to low and decreasing interest rates and the continued strong economy. The result is stability, which is generally good news,” Slater concludes.
Advice for Buyers and Sellers
Slater advises both buyers and sellers to engage in the process. "For buyers, the strategy of trying to wait things out clearly hasn't been working, and interest rates are predicted to go back up... so, home ownership is likely to get more expensive," he says. For sellers, Slater advises that there's too much uncertainty to wait any longer than necessary. "We have a reasonable market right now. I can't predict the future," he adds.
For those who are curious about the data for the City of Boston, Slater observes that the numbers look similar: volume is down, inventory is up, and selling prices are slightly higher (1.5%).
Jonathan S. Slater
President, Sequel Residential
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