The real estate market in Massachusetts weakened noticeably in the last quarter of 2018, mirroring the slowing pace of home sales in most regions of the US. The late 2018 housing slowdown caught many Massachusetts home sellers by surprise, coming as it did in the midst of a robust economic expansion in the Commonwealth and the rest of New England. With so many new high paying jobs being created in Massachusetts and thousands of new residents moving to the Bay State, many are wondering why the MA housing market suddenly slowed and what might the current slowdown portend for 2019?
High prices, rising mortgage interest rates and emotions
As brilliantly described by Neil Irwin in an insightful article published recently by The New York Times, the roots of the nationwide real estate slowdown lie in home buyers’ resistance to ever-rising home prices. As explained in Mr. Irwin’s article, home prices became increasingly unaffordable as 2018 unfolded because mortgage interest rates rose steadily throughout the year. Today, mortgage rates stand nearly 25% higher than they did back at the start of 2018.
In his article, Irwin describes how the historically low interest rates in place for years in the aftermath of the 2007 – 2009 Great Recession helped enable home prices to rise sharply in most regions of the country. Irwin notes that since the national economic recovery got underway in 2010, the rise in home values has outstripped gains in personal incomes. Ultra-low mortgage rates helped mask the fact that home buyer incomes were failing to keep pace with escalating home prices. As mortgage rates climbed throughout 2018, however, home buyer purchasing power steadily waned and demand for housing progressively cooled.
You can read Mr. Irwin’s full article using the hotlink here, or in the image below:
Stalemate in the current market
Irwin makes a very telling observation about residential real estate: decisions about whether to buy or sell a home can be affected greatly by emotions, much more so than with investment decisions concerning commercial real estate or the stock market. The emotionally charged aspects of choosing how and where to shelter your loved ones can dramatically color residential purchase and sale decisions.
The emotional dimensions of residential real estate help explain what Irwin terms the current “stalemate” that exists between home buyers and sellers at year’s end.
In Massachusetts, and in many other formerly high-flying markets elsewhere in the US, today’s sellers remember the previously overwhelming flood of demand for homes. The jam-packed open houses and cutthroat bidding wars that were so commonplace just a short time ago have conditioned sellers in the Bay State and across the nation to expect to command ever-higher asking prices. Sellers today are having a hard time emotionally adjusting to the reality that they can no longer demand a premium for their property.
On the buying side, it’s the mirror image. Today’s home buyers sense the bloom is off the housing market. Buyers feel ill-used by the formerly hyperly competitive market. Home buyers now want to be respected and valued by home sellers. They feel the bite of higher mortgage rates and do not want to make a mistake by paying too much for a home. Buyers today seek homes that are sensibly priced.
Current conditions in Massachusetts
The most recent sales statistics available from MLS-PIN show what is going on in Massachusetts real estate as the 2018 holiday season approaches:
In the broadest readings of the market shown above (all of Massachusetts and Eastern MA), what stands out the most is that the median sale price is higher this year than back in 2017. Note also that days to offer are down (for those listings that found buyers and went under agreement). So the real estate slowdown in the Commonwealth has not negatively affected selling prices and there is sustained demand for homes priced compellingly. In other words, if your asking price is perceived by buyers to be attractive, you will sell!
However, the number of homes for sale, both in Eastern MA and throughout the Bay State, is much higher as of November 15, 2018 compared to the same date last year. Additionally, home sales volume for the period of October 1 – November 15 has slipped significantly this year, compared to the same period in 2017.
(All stats in the above chart for Franklin are down. However, these most recent statistics for Franklin, MA do not merit careful consideration since they represent such a small geographic sample over such a short time period.)
Outlook for 2019 in light of the current slowdown
Neil Irwin’s article in The New York Times concludes with a detailed discussion of the outlook for US real estate in light of the current slower conditions. The conclusions reached by Irwin are encouraging for 2019. He states that the ongoing weakness may not turn out to be protracted and may not lead to significant decreases in home prices.
In the the downloadable version of the article available above near the start of this post, I highlighted the sections towards the end of the article that set forth why Irwin believes in a positive outlook for the real estate market. Below, I restate some of his reasons for optimism in 2019 and beyond:
Looking at the Massachusetts real estate market at the close of 2018
I can add some additional Massachusetts-specific support to Irwin’s belief that there has not been widespread over-speculation in the housing market: housing starts in Massachusetts have been sorely lacking since the Massachusetts economy started growing in 2010. Even in the context of the current housing slowdown, there remains a pressing inadequacy in the supply of homes in Massachusetts.
Unlike the “Condo-Mania” craze in MA back in 1987 that preceded the devastating real estate crash of 1989 which rendered insolvent many banks and mortgage lenders in New England, there simply are not a lot of speculative housing developments in the pipeline in Massachusetts. (A lot of the investment money in Massachusetts has been going into constructing rental apartments, not condo complexes and subdivision developments.) The lack of a present-day overhang of speculative projects that could fail en masse and trigger a credit crunch in Massachusetts should help forestall a sharp retrenchment in home prices in the event that the local economy falters.
Whether Irwin is correct in his benign take on the likely effects of the current real estate slowdown, only time will tell. It seems clear, however, that if you are in the market to buy a home or an investment property in Massachusetts, now seems a very good time to take advantage of the current slower pace of home sales. There are listings that were over-priced earlier this year and are still sitting unsold today. Some of those frustrated home sellers should be keenly open to offers!
Contact me for help in identifying properties that are ripe for offers! On the selling side, I will help you price properly so you can capitalize on today’s advantageous prices – now’s a great time to sell!
Copyright ©2018 02038.com
You get more with Warren Reynolds than you do with other top real estate agents. You’ll find in Warren rare knowledge and experience dedicated to helping you achieve all the value that home brings. Warren has a law degree and 20+ years of home selling success in Massachusetts. — talk with Warren today! 508-561-6259
"We have now bought and sold five homes. By far, you have been the best realtor we have worked with. Your professionalism and knowledge are so valuable to your clients. You made this process so easy. "-CB
Make better decisions
and feel in control.
Did you know you can materially improve your home selling success by choosing your marketing agent and brokerage brand wisely? It’s true! A marketing agent with a sterling reputation, backed by a strong brokerage brand, will do wonders for the reception your home gets upon entry to market. Call Warren today! 508-561-6259
"As first time homebuyers we were fortunate to work with Warren. He was a great asset and sounding board. He always gave solid advice. Warren played a pivotal role in helping us negotiate with a difficult seller. We truly benefitted from having Warren in our corner and so will you." -JK
Maximize your home selling success.
Not only is Warren highly skilled and dedicated to protecting your best interests, he will be highly responsive to your needs! He CARES about his clients and is always, always there for them. Why not give it a try? Contact Warren now and see how well he takes care of you! – talk with Warren today! 508-561-6259
"I had many, many questions which Warren was always more than willing to answer with a never ending patience. Throughout the process Warren looked out for my best interest. I may have purchased a garden style condo but Warren treated me like I was purchasing a million dollar estate!" -MP
Get the attention you deserve.
Warren is a very creative real estate practitioner and he uses that creativity in ways that provide important advantages to clients. Creatively runs in Warren’s family! His uncle was Harnett T. Kane, an internationally-recognized investigative journalist and New York Times best-selling author of thirty books about the American South. Experience Warren’s refreshing difference today! 508-561-6259
"Your creative approach to all aspects of my move helped make the transition easy and pleasurable. You were recommended to me by a friend who appreciated your integrity, expertise, friendliness and conscientiousness - qualities that I have witnessed in abundance as we've worked together." -KB
Get creative with Warren.
Warren is a highly dedicated professional in all his real estate dealings. That means he will continue to serve you well, even when others would compromise on their commitments. Warren’s ultimate goals in business are better transactions and greater client satisfaction. Talk with Warren today! 508-561-6259
"As first time homebuyers we were fortunate to work with Warren. He was a great asset and sounding board. He always gave solid advice. Warren played a pivotal role in helping us negotiate with a difficult seller. We truly benefitted from having Warren in our corner and so will you." -JK
Maximize your home selling success.
All real estate agents are legally and ethically bound to be fiduciaries acting in their client’s best interests. His name stands for integrity and he takes his fiduciary duties to you very seriously. He’ll steadfastly put your interests first throughout your home purchase or sale – talk with Warren today! 508-561-6259
"Warren was always there for us. Throughout the process, Warren kept on top of all our concerns. Warren worked for us, and looked out for our best interest. He is a very professional and caring person." - BP
Feel safe and well taken care of.
Warren is a highly dedicated professional in all his real estate dealings. That means he will continue to serve you well, even when others would compromise on their commitments. Warren’s ultimate goals in business are better transactions and greater client satisfaction. His devotion to excellence can demonstrably improve your home buying and selling decision-making and, consequently, your experience of home ownership. Warren constantly stays current on the local housing inventory. And he is conversant with the broader market trends that affect home sales statewide link to Market Updates. Warren knows that the market knowledge he works so hard to maintain and his high standards of real estate practice help him achieve for you the lasting, true value of home ownership. Talk with Warren today! 508-561-6259
"Warren was the finest real estate agent we've ever worked with. This was evident to us in comparison to quite a few realtors we attempted to utilize, as they were not very helpful, understanding or willing to work with us based on our preferences." -SM
“If you think it’s expensive to hire a professional,
wait until you hire an amateur.” Red Adair
Did you know you can materially improve your home selling success by choosing your marketing agent and brokerage brand wisely? It’s true! A marketing agent with a sterling reputation, backed by a strong brokerage brand, will do wonders for the reception your home gets upon entry to market. Warren is known in the local brokerage community as a dependable, highly skilled professional who is a straight-shooter. Other agents like working with Warren because they know they can trust him to be a reliable partner in any transaction. And the Berkshire Hathaway HomeServices brand stands for sound decisions and extraordinary strength and stability. The “Forever Brand” brokerage created by Warren Buffet sets the standard for the real estate industry by focusing not on selling more homes, but rather on selling homes for more!Call Warren today! 508-561-6259
"As first time homebuyers we were fortunate to work with Warren. He was a great asset and sounding board. He always gave solid advice. Warren played a pivotal role in helping us negotiate with a difficult seller. We truly benefitted from having Warren in our corner and so will you." -JK
Maximize your home selling success.
Not only is Warren highly skilled and dedicated to protecting your best interests, he will be highly responsive to your needs! He CARES about his clients and is always, always there for them. In person, by phone, email or text, whenever you need him, you’ll get a prompt response from Warren! Warren’s clients rave about the high degree of consideration and attention they get from him. Why not give it a try? Contact Warren now and see how well he takes care of you! – talk with Warren today! 508-561-6259
"I had many, many questions which Warren was always more than willing to answer with a never ending patience. Throughout the process Warren looked out for my best interest. I may have purchased a garden style condo but Warren treated me like I was purchasing a million dollar estate!" -MP
Get the attention you deserve.
Warren is a very creative real estate practitioner and he uses that creativity in ways that provide important advantages to clients. Creatively runs in Warren’s family! His uncle was Harnett T. Kane, an internationally-recognized investigative journalist and New York Times best-selling author of thirty books about the American South. Warren employs his own creativity by producing compelling marketing, both in print and especially online! His www.02038.com, is a highly effective website promoting the wonderful lifestyle afforded by the Town of Franklin, MA. And his Market Updates content on Massachusetts real estate trends gives home buyers and sellers alike the context they need to make more informed decisions about their housing investments. Warren frequently uses his abilities to devise resourceful solutions to the diverse challenges that threaten to complicate most real estate transactions. Warren has made real estate his career and won many sales awards in his 20+ years in brokerage, including the highly prestigious Chairman’s Circle Gold Award and the elite Centurion Award. Experience Warren’s refreshing difference today! 508-561-6259
"Your creative approach to all aspects of my move helped make the transition easy and pleasurable. You were recommended to me by a friend who appreciated your integrity, expertise, friendliness and conscientiousness - qualities that I have witnessed in abundance as we've worked together." -KB
Get creative with Warren.
You get more with Warren Reynolds than you do with other top real estate agents. You’ll find in Warren rare knowledge and experience dedicated to helping you achieve all the value that home brings. Warren has a law degree and 20+ years of home selling success in Massachusetts. His legal knowledge and decades-long experience in putting — and keeping — real estate sales together give him a better handle on the legal, practical and emotional dynamics of the real estate transaction. Warren uses these skills to empower clients to achieve more! He often anticipates and resolves problems BEFORE they can become serious impediments. Enjoy the sense of trust, security and control that comes from having a highly skilled expert at your side — talk with Warren today! 508-561-6259
"We have now bought and sold five homes. By far, you have been the best realtor we have worked with. Your professionalism and knowledge are so valuable to your clients. You made this process so easy. "-CB
Make better decisions and feel in control.
All real estate agents are legally and ethically bound to be fiduciaries acting in their client’s best interests. But many agents give their fiduciary duties short shrift in their quest for the quickest and easiest path to a closing. Not Warren Reynolds! His name stands for integrity and he takes his fiduciary duties to you very seriously. He’ll steadfastly put your interests first throughout your home purchase or sale. This may make Warren work longer and harder for you than most other agents would. But ultimately, Warren’s diligence and attention to detail is his commitment to an experience that transcends the sale. He wants you to have the confidence and peace of mind that comes with having a true fiduciary protecting you. Discover the difference of working with an agent who does not view you as just another opportunity for a commission – talk with Warren today! 508-561-6259
"Warren was always there for us. Throughout the process, Warren kept on top of all our concerns. Warren worked for us, and looked out for our best interest. He is a very professional and caring person." - BP
Feel safe and well taken care of.