With many buyers pushed out of the market or further afield from their jobs in recent months, sellers are losing some of their clout, real estate agents and brokers say.
Do you make at least $181,254 each year? Then good luck being able to afford the median home in Greater Boston.
How about $115,674? No? Then the Worcester area is out.
And don’t even think about trying to buy on the Cape and Islands unless you can put together $298,218 every 12 months.
Things might be easier if you’re looking in the Berkshires – that’s just going to require an income of $96,236 – or Springfield, where the median home calls for annual pay of $87,412, or $25,066 more than the metro area median income, according to the Census Bureau.
These figures, released by the Harvard University Joint Center for Housing Studies as part of its annual State of the Nation’s Housing report for 2022 and based on April’s sales and mortgage figures, help illustrate why sales of single-family homes statewide are off 10.15 percent year-over-year through May 31, according to data released last week by The Warren Group, publisher of Banker & Tradesman.
Price Adjustments Jump
Since the end of April, when the average 30-year fixed-rate loan carried a 5.1 percent interest rate, according to Freddie Mac, rates jumped to 5.78 percent by June 16 thanks to the Federal Reserve’s inflation-fighting efforts and anxiety about the global economy. Altogether, it’s pushed many buyers out of the market, or into cheaper areas further away from their jobs.
“When you don’t have the pressure anymore, the demand, you have to now adjust. Interest rates took a certain amount of buyers out of the market,” said Cambridge-based RE/MAX Destiny Realtor Melvin Vieira Jr., 2022 president of the Greater Boston Association of Realtors.
Nearly 12 percent of residential listings statewide had price adjustments in May, said Anthony Lamacchia, broker-owner of Lamacchia Realty, citing MLS data. That’s not just up from May 2021, when only 8.26 percent of listings had their list prices tweaked, but much higher than the share in the same months in 2019 (8.11 percent), 2018 (9.62 percent) and 2017 (7.01 percent).
Price adjustments are typically a sign that a seller has overpriced their home relative to buyer demand, and before the pandemic would usually rise throughout the year as homes unsold during the spring market sought to attract new buyers during the less-intense fall market.
“Rates basically doubled since January,” Lamacchia said. “Most of the sellers aren’t aware and don’t get it. Unfortunately, they have to learn the hard way.”
More Single-Family Inventory Hits
Several parts of the state also saw bumps in the number of single-family homes hitting the market last month. The area within Route 128 and MetroWest, served by the Greater Boston Association of Realtors, saw 7.8 percent more single-family listings come online versus May 2021, and the Worcester metro served by the Realtor Association of Central Massachusetts saw a 10.8 percent jump.
“It depends on who you talk to, but there are some sellers who are getting concerned about a recession, and if [they] don’t sell now how much equity loss might there be,” said Dawn Ruffini, broker/owner of RE/MAX Connections in Wilbraham. “They are almost trying to time the market, which is impossible.”
Other sellers are relocating or taking advantage of the school year’s end, Viera said.
MLS PIN data tracked by Lamacchia’s brokerage shows the number of single-family homes on the market each Saturday definitively pushed past 2021’s trend over the course of June.
In addition to price cuts, the market’s changing mood has some sellers changing their behavior in the Pioneer Valley, said Ruffini, who’s also the 2022 president of the Massachusetts Association of Realtors.
“Sellers are starting to think [they] might need to do some repairs to [their] house,” she said. “Buyers’ bandwidth is tightening as to the amount of repairs they can afford.”
No Crash for Mass.
Still, a tempering of buyer demand from last year’s fevered pitch won’t represent a cool market by any means. Agents and brokers interviewed for this story uniformly described the situation as a return to a more 2019-like market over the next few months, with some reluctant to even use the term “cooling down” given that the yearly median single-family and condominium sale prices jumped 3.9 percent and 4.1 percent over the prior year.
James Sanna
Monthly data released by Redfin says metro Worcester and Greater Boston are the most and third-most competitive markets in the nation, respectively. Eighty-one percent of the offers Redfin’s agents wrote in the Worcester area in May were met with at least one other offer. That’s up from 75.3 percent the previous month and 77.3 percent last May.
“The demand is so high for housing right now, even though interest rates are climbing there are still multiple offers on properties,” Ruffini said. “Until we get housing supply, I don’t see that changing significantly regardless of the economics because housing is a fundamental need. Whether you rent or own, everyone needs a place to live.”
Add to that: the state’s strong economy and high-paying jobs in industries like education and medicine give many buyers plenty of financial firepower, Lamacchia said.
As the market shifts, sellers’ agents are starting to field angry messages from their clients upset that their home received fewer bids than a neighbors’ or that offers aren’t as high over asking price as those made on a friend’s house last fall.
“The only way you’ll get through to a seller is to educate them” before a home goes on the market, he said. “We’re all human beings. None of us are at our best when we’re trying to get the largest amount of money for something. Realtors get more credit than we deserve when homes sell fast and more blame than we deserve when homes don’t sell.”
