Outlook for 2023 spring actual property market
Spring has historically been the busiest time of year for the residential real estate market in Massachusetts. However, David McCarthy, president of the Massachusetts Association of Realtors (MAR) and broker and operating partner for Keller Williams Boston-Metro, does not think this spring will see the action it has seen in past markets due to the extremely low inventory of homes being listed.
“I feel like we stole sellers in the last couple of years from future markets,” said McCarthy, referring to the frenzy of homes being sold during the pandemic.
The cycle of home ownership is typically seven to 10 years, and McCarthy doesn’t expect to see inventory climb at any significant rate in 2023 due to the sales volume in 2020 and 2021.
Real estate sales continue to trend down, while single family home prices continue to rise
Data in the most recent report released by The Warren Group, LLC indicates single family home sales are down 32.6% on a year-over-year basis. This marks the fewest number of single family home sales for the month of January since 2011.
However, the median price of single family homes and condominiums reached a new all-time high for the month of January, according to The Warren Group LLC report.
Cassidy Norton, associate publisher and media relations director of The Warren Group LLC, believes this trend will continue in the spring market.
“The trend is that Massachusetts’ home prices are high and going higher. That’s been the trend for several years and I don’t see it changing in the spring or later this year,” said Norton.
Greater Boston Association of Realtors (GBAR) President and Leading Edge agent Alison Socha expects price declines to be modest because demand still far exceeds supply.
Will inventory of houses increase this spring?
Socha expects listings to improve in the months to come.
“We have already seen listings increase on a month-to-month basis in both the single-family and condominium market since December, however not at the rate we would hope for, especially given our relatively mild and snow free winter,” said Socha.
She is optimistic the trend will continue this spring, assuming sellers feel more comfortable they will be able to find another property to purchase if they do put their home on the market.
McCarthy said inventory typically increases in March, April and May. However, he doesn’t think there will be a spike and he expects the low inventory to continue in the months to come.
Norton thinks that the current interest rates — which are double what they were last year — are deterring people from selling, rather than constraining buying power.
“That further hinders inventory, which in turn pushes prices higher,” said Norton.
“I think the market this year will be less hot, but certainly nowhere near a balanced market.”
Competitive market for homebuyers
“Buyers are back and eager to get a head start on the spring market now that mortgage rates have retreated a bit,” said Socha.
McCarthy said he expects the market for buyers to be competitive this spring in Massachusetts, which is driven by the lack of inventory. However, for sellers, he expects the spring market to be good, as long as homes aren’t over-priced.
Due to the low inventory, it’s more challenging for buyers to find a home, but McCarthy said buyers are still holding out if a home doesn’t have all the criteria they are looking for, which he believes is due to the higher interest rates.
“People aren’t as anxious. They are much more willing to wait if a home doesn’t meet all their needs,” said McCarthy.
He also said just because homes are taking longer to sell and there aren’t as many, buyers should not think they can low ball offers.
“It will be competitive,” he said.
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Socha agrees there has been a steady uptick in requests for showings and a lot of foot traffic at open houses over the past several weeks, but would-be sellers are in no hurry to list their homes for sale.
“Consequently, as the competition has picked up, multiple offers, pre-offer inspections, and certain buyer concessions have made a comeback,” said Socha.
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What kinds of homes are selling?
McCarthy said new construction or recently renovated homes are selling well.
“People like buying something they don’t have to do work to,” he said.
He also said homes that have a first floor primary bedroom are appealing to first time home buyers as well as people who are downsizing.
Advice to buyers and sellers in today’s real estate market
Buyers should be thoughtful and be educated as they pursue homeownership, said Socha.
“They should find a trusted advisor who has the skills and expertise to help them navigate the evolving real estate market,” she said.
She also advises both buyers and sellers to put their best feet forward this spring.
“For sellers, that means evaluating where their home best fits based on market conditions to maximize their opportunities; while for buyers, it means identifying a home that meets their needs and budget so they can feel confident,” said Socha.
She expects a more relaxed sales pace, although should inventory remain tight, demand may feel more intense in some cases.