Sales Crushed by COVID but Prices are Up
This Lamacchia Mid-Year Housing Report presents overall home sale statistics as of the first six months of 2020 compared to the same period last year, January 1st to June 30th, 2019. Highlighted in this report are the average sale prices for single-family, condominiums, and multi-family homes in Massachusetts along with the number of homes listed for sale and placed under contract.
Sales Down by 15.3%
There was a total of 34,992 homes (including single families, condos, and multi-families) sold in Massachusetts in 2020- 6,331 fewer sales than 2019 in the same timeframe. Single families decreased by 13.9%, condos decreased by 16.9%, and multi-families decreased by 21%.
Below is a graph that illustrates home sales in the first six months of the year since 2017. This year began already breaking trendlines, but as soon as April hit, sales declined significantly due to the pandemic.
Prices Up 6.5% in Massachusetts
Prices are up in all three categories in 2020, as we saw a 6.5% increase overall of $29,301. Single families increased by 4.5%, condos by 7.7% and multi-families increased 11.1%.
As you can see in the graphic below, 2020 prices increased over 2019 every month so far this year. The last few years have exhibited the same upward pattern.
Homes Listed for Sale
Due to the pandemic, the number of homes listed has decreased by 19.3%, with 11,497 fewer homes listed in the first half of this year over last. The year began with lower inventory than ever, and sellers aren’t listing at a rate fast enough to compensate for the drop in homes listed during the pandemic. Due to these factors, we are now at less than a month’s supply of homes.
Pending Home Sales (contracts accepted)
6,529 fewer homes went pending in the first half of this year over last, an almost 13.5% decrease.
As previously mentioned, there is currently less than a month’s supply of homes on the market. Part of that is because sellers aren’t listing, but another part is because homes are being placed under agreement as soon as they’re being listed. This is the highest absorption rate ever recorded. Buyers who had to wait to buy during the pandemic are highly motivated to lock a home down, mortgage rates are the lowest we’ve seen- now down to under 3% in some areas, and with fewer sellers listing their homes, pending sales are only down because there isn’t enough to go around.
As you can see in the chart below, the number of homes listed is down, and the number of homes going under agreement is almost exactly at the same level.
Predictions for the Rest of the Year:
The COVID pandemic threw this year into a tailspin. When the stay at home mandate was lifted, and sellers were able to safely list their homes again, the hope was that they’d list in droves and by summer compensate for the drop in listings from March and April. But so far there is no sign of that happening.
What instead is happening is buyers are actively buying but there aren’t enough sellers to compensate for the number of buyers. Click here to watch Anthony explain in this video. This is a hyper seller’s market and is very frustrating for buyers. The competition is high. Prices are being driven up due to multiple offer situations and bidding wars. Though mortgage rates are lower, which helps, because it’s less expensive to obtain a mortgage, buyers may have to outbid other buyers to get the house. Some experienced local Realtors have the negotiating power to secure the contract without having to pay more, but buyers should be prepared either way.
Sellers are pulling their necks in, not only because of the concern for the COVID virus and having people in their home for showings but also because there’s the possibility that their home will sell much quicker than it will take for them to secure a home for themselves. There are workarounds that your listing agent will be able to put in place to avoid having to move twice, so it’s still worth listing to take advantage of the market.
Hopefully, sellers will begin to list more and more, and as buyers consume the inventory there will hopefully be less competition during the rest of the year. That won’t likely happen this summer, but hopefully, the fall will swing more into the buyer’s favor.