May Boston Area Home Sales Highest Since 2008

Boston area home sales in May were greater than in any other May since 2008, while home prices continued to rise. Sales are on a four-month trend in which they were higher than both the previous month and the same month in the previous year.

Boston area home sales were higher in May than in any other May since 2008

Many positive factors are contributing to a strong housing market this year. Job growth and wages are slowly improving, while rents are increasing rapidly and mortgages are becoming much more accessible. When these factors are coupled with continuing low interest rates, the result is a growing number of consumers with the confidence to buy or sell a home.

Completed transactions in May were 8.9 percent higher than in April and 3.5 percent higher than May 2014. The median sales price of homes sold has risen for 40 consecutive months.

Prices Increasing Along With Boston Area Home Sales

Boston area home prices also continued to increase. In May, the median price was 7.8 percent above the price seen last year. The average month-over-month increase for the first five months of 2015 has been 3.6 percent.

Looking beyond the Boston area, thirty-eight metro areas across the country reported higher sales on a year-over-year basis, with 11 reporting double digit increases in May.

The average days on market, or the number of days between when a home is first listed in an MLS and a sales contract is signed for all homes sold in May dropped seven days from April to 64, and two days below the average of 66 in last year.

The inventory of homes for sale increased by 0.4 percent from April, the first time back-to-back monthly increases occurred since May and June 2014. As home sales continue to grow, the months’ supply of inventory in May was 3.6 on a scale where six months indicates a market balanced equally between buyers and sellers.

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Boston Area Home Sales Slip – Lowest Level in 4 Years

Greater Boston area home sales have slipped to the lowest level in four years as the region continues to struggle with low inventory and the aftermath of a devastating winter, according to the May home sales report from the Greater Boston Association of Realtors.

The total amount of closed residential sales slipped by 9 percent, with single-family closed sales down 10.9 percent year-over-year and condo sales down 6.6 percent year-over-year. The median sales price rose 3.4 percent to $480,000 for single-family properties in Greater Boston and rose 9.4 percent to $456,900 for condominiums.

Boston Area Home Sales Numbers Echoed Statewide

Boston area home sales have slipped to the lowest level in 4 years

Boston area home sales numbers have echoed across the commonwealth, which saw fewer sales of single-family homes and condominiums year-over-year in May, according to the latest report from the Massachusetts Association of Realtors.

Statewide numbers saw Massachusetts with 4,517 single-family homes sold in May, down 5.2 percent from the 4,384 homes sold a year prior. The median home price of $341,000 was down 1.5 percent from last year’s median price of $346,325.

Meanwhile, there were 1,825 condominiums sold in May, down 10.1 percent from the 2,029 sold in 2014. But condo prices saw a 4.8 percent boost to a median price of $330,000, up from $315,000 the year prior.

Low inventory has once again pushed closed Boston area home sales down in May. But the good news is that new listings are coming on the market and that is a positive sign for the summer market. More homes for sale will help, but more work force housing is needed as is the removal of barriers to production to make up the gap.

Buyer demand is strong, but the shortage of listings is causing a lot of frustration among both buyers and sellers due to the upward pressure on prices. Sellers are leery about the uncertainty of being able to trade up or down because the market is so competitive, and that just adds fuel to the inventory shortage when sellers are not willing to put their home on the market for fear of not being able to find another home to move to.

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Record Existing Boston Area Home Sales Expected

Existing Boston area home sales are expected to finish the year at their highest level since 2006 according to the National Association of Realtors’ economic forecast forum revealed at its 2015 Legislative Meetings & Trade Expo.

However, accelerating price growth and rising mortgage rates have the potential to change the expected finish.

Existing Boston area home sales are expected to hit their highest level since 2006 by the end of 2015

In the most recent existing-homes sales report, sales surged to their highest annual rate in 18 months, showing a promising beginning to the spring home buying season.

Nationwide, total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 6.1% to a seasonally adjusted annual rate of 5.19 million in March from 4.89 million in February — the highest annual rate since September 2013 (also 5.19 million).

What’s Driving Boston Area Home Sales?

Sustained job growth and interest rates below 4% have been the catalyst behind the improvement in Boston area home sales where supply needs to increase measurably to meet the pent-up demand for buying.

Unlike the existing Boston area home sales market, demand for single-family new home construction remains weak, and the homebuilding industry is acting accordingly by focusing on multifamily rental housing. New home construction for first-time buyers is about half of the long-term average and the reason is simple: the decline in homeownership and marriage rates among young adults. Things are not projected to return to normal levels for the building market until at least 2017.

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Boston Area Real Estate News – May 2015

Boston Area Real Estate News - May 2015

In our Boston Area Real Estate News for May 2015:

Pending Boston Area Home Sales Up

Pending Boston Area home sales were up in March, even though the low supply of available homes for sale is still a concern.

The National Association of Realtors said this week that its seasonally adjusted pending home sales index rose 1.1 percent to 108.6 last month. The index has climbed 11.1 percent over the past 12 months after having dipped in 2014.

Pending Boston Area home sales were up in March 2015 with inventory of homes for sale still down

Overall, figures suggest strengthening demand from would-be buyers, even though there are relatively few new listings on the market and sales prices are rising at a faster rate than wages.

NAR says new home construction needs to increase and more existing homes need to come to market. Traditional buyers continue to replace investors paying cash. The association says that indicates this year’s activity is being driven by more long-term homeowners.

Pending Boston Area home sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale, meaning that the gains should appear in April and May sales numbers.

With pending Boston Area home sales up, greater buying activity has yet to bring more sellers into the market, with a mere 4.6 month supply of homes on the market. Economists consider a standard market to have at least a 6 month supply of homes for sale.

Right now, new homes are coming onto the market at about half of historic norms, creating a supply-and-demand mismatch that keeps younger households on the sidelines.

Building more new homes would help boost supply, but home construction has been weak. Developers are focused increasingly on building apartments and more expensive homes for wealthier buyers.

One factor pushing up prices is a steady decline in so-called "distressed" sales, which include foreclosures and short sales. Short sales occur when the seller owes more on a home mortgage than the house is worth. Both usually sell at steep discounts to traditional Boston Area home sales.

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Lowest Home Ownership Rate in 20+ Years

While Boston Area home sales continue to rise, the home ownership rate in the U.S. has fallen below 64 percent for the first time in over 20 years.

The U.S. Census Bureau announced that the seasonally adjusted 63.8 percent rate in the first quarter of 2015 is far below the 69 percent rate just 10 years ago – a time when homebuying may have been the easiest for Americans.

As investors continue to buy single-family homes to feed rental demand, and first-time buyers remain unable to afford rising prices, U.S. homeownership is taking a big hit.

Rentership has increased dramatically since the financial crisis and Great Recession, and continues to do so as the economy improves and more young people move out of their parents' homes into rental apartments. Many of them straddle jobs while managing student loan debt or other expenses, finding it impossible or extremely challenging to come up with a down payment in the current seller's market.

With millions of properties still underwater — those homes worth less than owners owe for their mortgage — there is still a stigma attached to owning a home in the wake of the 2007-2008 housing market meltdown and foreclosure crisis.

However, longer-term trends seem to be pushing homeownership rates back to "normal" levels, according to Sam Khater, deputy chief economist at CoreLogic.

In the mid-1990s pro-homeownership policies led to an expansion in mortgage credit and the homeownership rate peaked in 2004 at 69 percent. Homeownership rates are back to roughly their long-term trend between the 1960s and 1990s.

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Boston Area Housing Market Could Face Problems

With pending Boston Area home sales up and not a lot of new inventory coming on the market to help slow that down, and the home ownership rate now at it's lowest level in over 20 years, could there be trouble brewing in the housing industry?

The future of the Boston Area housing market depends on jobs, and people earning enough to buy houses. But experts at a recent forum are predicting problems due to income levels. Until incomes improve across the board and hurdles to credit access are eased, it is expected that the Boston Area housing market will continue to perform below capacity.

Some of the nation's top economists meeting at a forum at the National Association of REALTORS®' Washington, D.C., office last week all echoed the same sentiment.

Households could be trying to save more because of the "unique uncertainty" in people today. There's a general tendency now for people to want to save more, because they're afraid. They're afraid for their jobs. What do you do? You don't spend money lavishly; you try to accumulate some. But they don't succeed.

Economists at the forum said today's Boston Area housing market represents just a partial recovery from the severe downturn that hit the country about seven years ago, but they differed on how much of a role overly tight credit is playing in the slow return to a full recovery.

The problem today doesn't seem to be a credit issue. It's more of a demand issue. Borrowers have less money now after millions went into foreclosure. We're facing a whole new ball game in the Boston Area housing market, and it's anyone's guess if the lower income problem will be overcome soon enough to save the industry.

Boston Area Home Sales and Prices Rising

Boston area home sales continue to increase as more and more homes come on the market, a sign of strength in housing as the Spring home buying season swings into high gear.

Boston area home sales have been constrained by a shortage of properties on the market, which has pushed up home prices and limited choices for potential buyers.

Boston Area Home Sales Rising With Nation

Boston area home sales are rising right along with the rest of the country

The National Association of Realtors said just recently that existing home sales increased 6.1 percent to an annual rate of 5.19 million units, the highest level since September 2013. The percent increase was the largest since December 2010.

Economists polled by Reuters had forecast home resales rising to only a 5.03 million-unit pace last month.

The report was another indication that the economy is regaining some momentum after hitting a speed bump at the start of the year. But data on retail sales, housing starts and manufacturing suggest the rebound in second-quarter growth will probably be insufficient to convince the Federal Reserve to start raising interest rates in June.

The outlook for housing is favorable against the backdrop of a strengthening labor market.

The Mortgage Bankers Association said applications for loans to purchase homes increased 5 percent last week to the highest level since June 2013. It was the fourth time in five weeks that purchase applications rose.

At March’s sales pace, it would take 4.6 months to clear houses from the market, down from 4.7 months in February. A supply of six months is viewed as a healthy balance between supply and demand.

With supply still tight, the median price for a previously owned home increased 7.8 percent from a year ago.

That was the largest percentage gain since February 2014 and suggested that the pace of home price increases, which had been slowing after double-digit growth for much of 2013, appears to be re-accelerating.

First-time buyers accounted for 30 percent of transactions last month, well below the 40 to 45 percent share that economists and realtors say is required for a strong housing recovery.

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