Whats Actually Happening in Real Estate Now?
By now many of us have adapted and are making the necessary adjustments to our daily lives. Some of you may be wondering what's been going on in the Massachusetts real estate market. I’ll provide some general updates below and, as always, I’m happy to discuss your specific situation in detail with you.
Reported data from March and April show that the sale prices of homes have continued to rise. The typical length of time to complete the purchase or sale of a home is 6 -12 weeks. The homes that closed in March went under agreement in January and February. Also, even in early March the market was still in full swing and, if anything, was extra active, with buyers anticipating a future closure.Instead of focusing on sale prices, a naturally lagging indicator, I would suggest to watch these leading indicators:
1. Buyers are sitting out - but people looking for a home are joining the search again. Anecdotally, I can tell you that’s true, and the data bears it out. As a proxy, we can look at showings requested through the service ShowingTime, a national company that many agents use to handle scheduling. Here are charts showing weekly showings for 2020 compared to 2019.
If buyers were as active as normal for the spring, then we’d expect the showing activity to match last year’s trajectory, or actually to exceed it since private showings are the only option now that open houses are cancelled. But in fact, there was a sharp decline and showings this week are approximately 15% lower than at this time last year. However, people still need homes, and we can see showings starting to claw back up from rock bottom. I would anticipate that when things open up fully, whenever that may be, we’ll see an unprecedented flood of showing requests.
2. Sellers on the sidelines. Normally, spring is when we see a flood of new listings because people want to leave time to get situated before the school year. This year, many sellers are postponing their sales, either because they don’t want strangers coming through their homes or because they are afraid there aren’t enough buyers out there. The number of new listings is lower than at this time last year. For the period March 24 through May 4th:
3. But homes are still selling within the first two weeks! Between March 24th and May 4th, 34 sellers accepted offers. In the same period last year 106 sellers accepted offers. Although fewer properties have been sold, they are selling at roughly the same speed.
It’s worth noting that the reduction number is slightly above the 63% reduction in listings. In other words, even though there are fewer buyers and fewer sellers, the market may have maintained its balance. Looking just at the subset of properties listed since March 24th, of the 59 in Newton, 34 sellers (42%) have already accepted an offer! Although the absolute number is lower, as a percentage it’s actually an increase from last year when 106 (34%) of the 161 properties listed in this time period had sold by this date.
4. And prices are … up, down, and sideways. Anecdotally, sellers do seem less aggressive when setting their asking prices. For the places that don’t sell immediately, will sellers be quicker to reduce their asking price, or to entertain lower offers? Signs point to yes but we’ll have to keep monitoring.
Another factor is that many lenders are tightening their lending standards in response to the economic conditions. For example, Chase now requires a minimum 700 FICO score and a 20% down payment from most borrowers. In this environment, sellers may start to prioritize certainty of execution over sale price. For example, for a recent condo sale in Coolidge Corner, the seller received over a dozen offers, some significantly over the asking price. Instead of picking the highest price offer, the seller selected an offer that was only moderately over ask but was all cash and with limited contingencies.
What’s it all mean? Now more than ever, each situation is unique, and you need a good plan to meet your goals. I’m still working and have been successfully helping my clients reach their goals. Visit my website to review detailed market reports on specific areas in and around Boston. https://www.ryancookrealty.com
Don't see your area on my lists? Send me an email about preparing a market report relevant to your needs. If you are considering buying, or listing for sale or rent, please call or email me today so that we can strategize for your success.