After many years of strain and struggle, real estate agents looked to the market with renewed hope at the start of last year – and for many, those hopes were wildly exceeded, as the Bay State’s housing market turned in its strongest performance in eight years. Now, brokers and agents alike are hoping to move from strength to strength in 2014.

“Our projections are very strong. Last year, we beat all of our projections. Average prices were up, and we beat the [statewide average for sales]. Everything worked out well. And we’re sort of expecting a little bit more of the same,” said Carol Bulman, president and CEO of the South Shore’s Conway & Co.

A sense of firm, if temperate, optimism was the dominant emotion to be found in the responses to Banker & Tradesman’s annual reader survey, conducted by Sudbury-based market research firm Bannon & Co. Only 4.3 percent of real estate agents who responded to the survey felt the Bay State’s economy will skyrocket in 2014, compared to 7.1 percent who felt that way last year. But if there were fewer big optimists, there were also fewer pessimists: 10.7 percent of real estate respondents feared the state’s economy would decline last year, while only 4.3 felt that way in 2014. Instead, slightly over half felt that the local economy would improve moderately over the next year, while about 39 percent said they expect 2014 to be much the same as 2013.

The strength of the residential market seems to be the clear cause of agents’ confidence, with more than 78 percent of respondents expecting further growth in single-family sales next year, including a full third who describe sales increases as “very likely.” That’s about the same as the percentage of optimists in 2013 – last year, 77.7 percent of agents expected single-family sales growth.

More Positive

But while there’s about as many voices in the amen choir this year as last, they’re doing a much better job of drowning out the naysayers: While last year 14.8 percent of respondents thought single-family sales growth was unlikely, this year the gloom and doom chorus had exactly zero members. Instead, 21.7 percent of respondents thought single-family sales growth was, at worst, too close to call, up from 7.4 percent last year.

A big part of the case for optimism seems to be that real estate agents are finally waving goodbye to the tidal wave of distressed sales that swept over the market following the housing crash. Almost half of respondents – 49 percent – thought it unlikely that there’d be any growth in short sales in 2014, compared to 3.6 percent who felt that way in 2013. And on the flip side, only 13 percent of respondents think we’re likely to see more REO sales in 2014, compared to 60.7 percent of real estate brokers and agents who felt that way last year. The number of agents completing short sales also declined, with 34.8 percent of agents reporting completing multiple short sales in 2013, compared to 40.7 percent in 2012, while the number of agents who didn’t handle any short sales rose 4.5 percent, from 25.9 percent last year to 30.4 percent this year.

The biggest problem currently facing the industry is a simple and familiar one: lack of inventory. More than 91 percent of agents who responded to the survey said they had concerns about inventory levels in their market, with 17.4 percent of real estate brokers and agents calling current inventory levels in their area “a crisis.”

Sam Schneiderman, broker/owner of Greater Boston Home Team, would fit squarely into the 17 Percent. “In Brighton, I recently had a three family [listing]. We got 110 to 120 people to show up to an open house in 16-degree weather. I had 62 written offers and 10 verbal offers,” he said.

A Tale Of Three Regions

That kind of market strength wasn’t quite universal – while more than 95 percent of agents called the Greater Boston market healthy, only 16.7 percent of agents in Central Massachusetts and 10.5 percent of agents in Western Mass could say the same. But these numbers still represented improvements over last year: In 2013, 5.6 percent of agents thought both Central and Western housing markets were on their death beds; nobody felt that way this year.

“Out here in the [Pioneer] Valley…it’s been pretty consistent. We don’t see a lot of highs and lot of lows, we kind of just go along at an even keel,” said Corinne Fitzgerald, broker/owner of Fitzgerald Real Estate in Greenfield.

“We do have some multiple offer situations, because when something comes on, people jump on it,” Fitzgerald said. “I think confidence in the market has definitely increased. But what we need is the move-up buyer. If the move up buyer’s not moving, the market’s not going to be as steady, as healthy. And right now we have a lot of people staying put.”

Fitzgerald was worried however, that a continued increase in interest rates could dampen buyer enthusiasm. In December, the Federal Reserve Bank announced that it would begin tapering its bond-buying program; some economists project that rates could rise up and over the 5 percent threshold in the coming year as the Fed continues to wind down its purchases.

Other observers were more sanguine. “I think they’re going to be pretty careful about this. They know that housing is a big driver of the economy… our bets are that the housing market will still be strong [in 2014] because they’re not going to be overly aggressive,” said Chris Raveis, managing partner of William Raveis Massachusetts.

And Schneiderman argued that as rising interest rates and prices continue to push buyers to expand their search parameters, it will help outlying markets.

“We’re not at the point where interest rate rises have pushed people out of the market. What it’s doing is that it’s redistributing where people are looking. And that’s good for the areas that are still coming out. People who might have been looking inside of 128 are now going to get pushed out again, because of the interest rates and qualifications. So it’s going to make the outlying markets much, much stronger over the coming year,” he said.

After 2013’s bonanza, another trend to watch out for will be big brokerages spreading their footprint. “I think real estate companies are definitely in a better position than they have been in the past seven years, so when that happens, I think that feeling better about reinvesting in their business to expand. We’ve been following that pattern – this past year, we’ve acquired a company in Andover, opened an office in Plymouth, Cohasset, Milton. It think it’s about six offices in total. That will continue,” said Raveis.

Email: csullivan@thewarrengroup.com