Nationally, the answer appears to be yes. Rapidly rising interest rates, inflationary prices and stock market declines have all contributed to a significant drop in mortgage applications and home sales - THIS DOES NOT MEAN A HOUSING CRISIS!
In 4 of the last 6 recessions, home prices actually appreciated and we’re optimistic our Real Estate Market will continue to stay on the healthy path. (See graph below)
Data collected at the end of quarter TWO - 2022:
Among single-family homes, some local indicators are clearly pointing toward a market correction. Compared to June 30, 2021, the number of single families on the market was up 37% and price reductions increased 20%. Pending sales and closed sales were both down.
There were some bright spots for sellers. Average sales price grew 11% year over year while median sales price jumped 9%. Days-to-offer was down 21% (a sign that buyers were quickly snapping up new inventory) and sale-to-list ratio (i.e., the final sales price divided by the original list price) was up 1.6%.
What does this mean for sellers?
Sellers would be wise to adjust their expectations in light of these trends, particularly in the single-family arena. Pricing strategy is critical; most of our communities have seen an uptick in price reductions, which indicates it is possible to overprice a home in this market.
Today, many homes are still receiving multiple offers, however, fewer offers are arriving. Sellers (especially of homes under $1.5 million) are considering offers with financial and other contingencies. Furthermore, buyers are less likely to bid as significantly over the asking price as they were just months before.
What does this mean for buyers?
Buyers should not assume home prices will come crashing down anytime soon. In Greater Boston, a variety of factors will continue to cause inventory to remain low. The rise in interest rates will also complicate matters. Buyers may need to reconsider what purchase price is realistic for their budget or explore an adjustable rate mortgage to keep payments affordable. While affordability will be a challenge, those who are in a position to buy now will almost certainly benefit, as home prices have historically appreciated over the long term.
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As we move towards a crisp September, we anticipate a strong & busy Fall Real Estate Market. According to NAR (National Association of Realtors) they are predicting price increases to about 5-6% by the end of the year.
