Between late August and late September, Stacey Alcorn noticed housing inventory increasing throughout Massachusetts.
“What’s interesting,” the LAER Realty Partners broker and CEO said in a recent interview, “is it’s taking buyers a while to catch up to the fact that there is more inventory on the market.”
Who could blame them? The pandemic normal in residential real estate in Massachusetts and beyond has been inventory so minimal that it brings the word “scrounging” to mind, with buyers pitted against each other: offering cash, waiving contingencies, and bidding tens of thousands above asking price. But shortly after Labor Day, tendrils of normalcy emerged, thanks to an increase of homes for sale. It wasn’t a flood, and the process and cost of buying a home haven’t returned to pre-pandemic standards, but the long real estate nightmare has eased – at least a little bit, at least for now.
According to MLS PIN data provided by Lamacchia Realty, shortly after Labor Day, 5,036 single-family homes, condominiums and multifamily properties were listed for sale in Massachusetts. That was the most in any single week this year, although still not quite as many as in 2020 and in line with most pre-pandemic years. As the month wound down, that number had dipped to 2,265, a movement mimicking the ebb and flow of homes coming on the market in 2019. Given all of this, the five weeks starting the week after Labor Day have likely become the best time to buy this year, Lamacchia Realty Broker/Owner and CEO Anthony Lamacchia said, a trend he expects to continue until the winter.
Vicious Cycle of Sellers Waiting
Until recently, Massachusetts real estate was caught in “a self-fulfilling prophecy,” he said. Early in the pandemic, fear of COVID-19 kept would-be sellers from listing their homes. As time went on and the mismatch between supply and demand widened, a new fear – that of not having anywhere to move – held sellers back.
“The lower the inventory gets, the lower the inventory gets, meaning people don’t know where they’re going to move to, so they’re going online, they’re seeing – occasionally – seeing a home they like, most of the time not seeing what they want. And when they see one they like, fast forward two days, it’s sold,” he said. “And they think, ‘I don’t want to get into this frenzy.’”
The fear is real in the Pioneer Valley, too. Sandy Wentworth of the Wentworth Miller Team of Jones Group Realtors said that she and partner Larry Miller tell people that in this seller’s market, they can include new housing as a condition for sale.
“So, we see a lot of listings that come up that say, ‘subject to the seller finding suitable housing,’” Wentworth said.
A small group of sellers, anecdotally characterized as older than 60, continue to ride out the pandemic in the large homes they’re actually ready to sell.
“They’re the least motivated sellers,” Lamacchia said, and their unhurriedness means few to no options for move-up buyers and others craving more space, even as smaller homes come on the market.
On the whole, though, “people are a lot less afraid [than a year ago], even with the Delta variant,” said Elaine Bannigan, owner of Pinnacle Residential Properties. Bannigan, who focuses on single-family homes in Wellesley, noticed that this year’s inventory nadir arrived in March.
“Six months ago was a wild ride,” she said. “We had about 45 percent fewer houses across the state than we do right now. So that’s a pretty big number. The supply has risen that much in the fall market.”
“More houses did come on, but more houses come on in the fall every single year since I’ve been in business,” Bannigan continued. “So that was not, ‘Oh, gee, all of a sudden, they all decided to put their houses [on the market].’”
True ‘Normal’ a Long Ways Off
Still, the momentum is there.
“Ordinarily it would slow down in September, but it hasn’t this year,” Wentworth said of Franklin and Hampshire Counties, where her sales rhythms generally parallel the academic calendar. “In fact, we’ve listed a couple of different houses…and we have two or three more coming,” she added.
And in Wellesley, there are typically about 100 homes for sale; inventory dipped to nine homes in March. Now, the town is up to 27, Bannigan reported in late September.
“We’re all feeling a little bit of a sigh of relief for more normalcy,” she said. “It’s still a seller’s market, but there is more for buyers to choose from.”
While not a massive influx, the recent inventory increase has intersected with another critical factor: buyer fatigue. Referencing a July report from OpenDoor, Bannigan said that close to 40 percent of buyers have bowed out of the market.
The scale of disruptions over the last 18 months were so great, however, true inventory normalcy may not appear for a while.
“That’s how much this thing screwed up the market; it is possible that it will take 3-and-a-half years until we get to the point that the inventory levels sustainably match [2019’s] levels, you know,” Lamacchia said.
Shortly after Labor Day, 5,036 homes were for sale in Massachusetts. That was the most in any single week this year, but less than half the number on the market in a normal pre-pandemic year.
When Will Buyers Spot Shift?
Alcorn’s agents at LAER Realty Partners have recently noticed that some buyers don’t realize that the market has shifted. When bidding on a home that’s been on the market for four or five days, they sometimes offer $50,000 above asking price.
“And there’s no inspection contingencies,” Alcorn said. “I think eventually buyers are going to say, ‘Wait a second. I might be the only offer on this property. Maybe I don’t have to pay more, and, in fact, maybe I can negotiate a little bit on the price.’”
As for sellers, many have had to reduce their asking prices, having overestimated what buyers will pay, and homes are sitting a few days longer than they have been.
“Those price reductions are sellers that went high to begin with, more than what the market value was, and they’re seeing that they need to be a little more competitive now that there’s more inventory,” Alcorn said.
In the absence of a clear signal such as a price reduction, Alcorn advises buyers and their agents to dig a little before making an offer.
“Don’t assume that the fall market is what the summer market was. The buyer agent has to ask the listing agent, ‘Are there other offers?’” she said. “It really comes down to buyer agents educating themselves.”
