Declining prices? Check. Slowing construction? Check. More cautious prospective buyers and shrinking inventory? Check and check. The Boston-area housing market is poised to have a much different 2020 compared with the previous few years.
Time was the market scaled only upward, with prices escalating despite a steady pace of new home construction. Bidding wars were common and buying at over the asking price was par for the course.
As 2020 dawns, prices are moderating and the pace of new construction is slowing. At the same time—and not surprisingly—the numbers of both new listings and the inventory in general of available homes for sale have been dropping as have sales themselves.
What seemed once like the surest thing—putting your place on the market in the Boston area at a desired price—seems less sure now.
Sales of both single-families and condos dropped in November compared with the same month in 2018: 16 percent in the case of single-families and 6.8 percent in the case of condos. These are according to the latest numbers from the Greater Boston Association of Realtors and the Warren Group, a real estate research firm.
The same figures—which tracked closed deals in 64 Boston-area municipalities—also showed the numbers of new active listings for condos and single-families were down too in November, and the inventories of available single-families and condos were each static.
Meanwhile, and perhaps most importantly, the median sales prices for both single-families and condos barely budged in November compared with last year. The median condo price was basically the same as last November, at $563,000, and the median single-family was up a mere 2.3 percent, to $599,900.
The moderation has been even more pronounced in Boston proper. The median sales price for a single-family home in Boston proper in November was $604,500, down 0.7 percent from the same month a year before and down some 8 percent from October, according to the realtors association and the Warren Group.
For Boston condos, it was all downward. The median sales price was $645,000 in November, down 0.8 percent annually and 2.7 percent monthly. What’s more, Boston condo prices were down 1.9 percent year to date in November. The average price per square foot was down annually and monthly—1.9 percent in both cases—to $755 a foot.
As for sales in Boston proper, the number of single-family deals in November was down 35 percent annually and down 10 percent year to date. Condo sales were down 8.8 percent compared with November 2018 and 9.7 percent year to date. These sales declines reflect declines in the region overall.
Brokers have ascribed the drops in sales—despite the drops in prices—to a psychological shift in the marketplace. Prospective buyers are simply done with years and years of escalating prices in the Greater Boston market. Call it a correction or a rebalancing then—a trend borne out by months of data as of January.
There is another reason, also a bit psychological. More sellers are sitting on the sidelines, waiting to see where the market goes. The numbers of new condo and single-family listings region-wide dropped by double-digit percentages in November compared with October and with the same month a year before, according to the realtors and the Warren Group.
And then there’s the shrinking inventory, per the same figures. There were about two and a half months’ worth of supply of both condos and single-families in the region as of December—down precipitously from the same period in 2018, when there were enough available homes to satisfy around five months of demand.
A slowing construction pace is not going to do much to help. New figures show that the number of building permits for new housing—including rental—fell in Boston by nearly 25 percent year over year in 2019, for instance. And the costs and the headaches of new construction remain high in the region compared with the most other U.S. metros.
Make no mistake: The Boston area remains one of the most expensive places nationwide to buy a home; and the spring market—traditionally the busiest of the year for home trades—might thaw the uncertainty. Stay tuned.
Meanwhile, there’s always the rental market. That hasn’t changed much.