Many of our clients read The Boston Globe for real estate news. In an October 4, 2021 article, entitled “(Some) good news for buyers in Boston’s (slightly) cooling housing market,” Zoe Greenberg gave some hope that the post-lockdown housing boom is showing signs of going back to the seller-favoring conditions we have had since the end of the last recession.
Below are my notes on her points.
For 18 months, home prices in Greater Boston soared. There were none of the typical summer lulls or seasonal swings, just up and up, ever-higher prices for sellers and an increasingly brutal market for buyers.
Notes: This is not a fair assessment of the past 18 months. The market went up and up, with no lull in demand, since Summer 2020; there was a deep drop in real estate business in Spring 2020.
There was a huge decline in residential real estate activity from March through June 2020. Occupied properties could not be shown in many municipalities because of Covid, and many buyers didn’t want to see occupied homes, for the same reason. Then, a spring-like market took hold through the summer.
Normally, properties are listed and go under agreement in high number from March into July, then there is usually a slow-down starting in July and running through Labor Day. In 2020, that slow-down didn’t happen in the summer because there was no spring market.
This fall, though, that has started to shift — a bit. The number of homes on the market rose. More sellers had to cut their prices.
The number of homes on the market is going up. This is true good news for buyers!
Pinning this good news to seller’s cutting prices is not a good indicator. Asking prices are a made-up number used to get the most people interested in making an offer on the property. With the kind of high demand coming from the Covid-inspired “I-hate-my-space” buyers, some sellers were underpricing to create demand. Other sellers were putting prices high to begin with, since they wanted to sell only if they could cash in on the high demand.
Why would asking prices go down?
- The artificially low prices hurt the marketing of properties with slightly higher asking prices. Once a property is on the market for 10 days, buyers begin to ask “What’s wrong with it?”
- Since many properties are going to bidding wars in a few days, buyers are making high-stakes decisions in a hurry. The hurry-up selling style is wearing on buyers. Many dropped out of the frenzy.
- Buyers are giving up on buying this year. They signed their August-to-August leases again.
- Some of the pent-up demand has dissipated over the course of the year, when buyers could go house hunting again.
Compared with the hot spring and summer, September brought some welcome signs for buyers. New listings jumped 25 percent in the first two weeks of September, according to GBAR, which includes 64 cities and towns in Metro Boston. In addition, the median listing price for single-family homes and condos dipped slightly, to $675,000 in September, according to Realtor.com. Price cuts, too, were more common than they had been in August.
This is true good news for buyers. The more properties there are on the market, the better the supply:demand balance for buyers. As the Globe article says, the market is still favoring sellers.
Our advice through the end of 2021:
If this is your year to buy, expect a seller-favoring market. What we were doing at 4 Buyers Real Estate to support buyers in Spring 2021 is still what we will do through the end of the year.
Buyers need someone to help them navigate through the hype of this competitive market. Buying the right place involves not only getting a fair price (in the market), but also retaining rights, like mortgage contingency and inspection. That’s what we do.