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By Tiffani Rice
If you have been in the market for a new home, you may feel like you have been out of luck lately, as if there is just nothing on the market, but that isn't the entirety of the housing situation. Inventory in the housing market has been plummeting over the last several years. The demand to buy homes has been rampaging, after economic situations have started to recover and improve from the 2008 recession, but the supply of homes has yet to match this growing demand in nearly all areas of Massachusetts, from downtown Boston to the Pioneer Valley. The Massachusetts Association of Realtors (MAR) recently reported, that "closed sales for both single family and condominiums were down over two percent in August (of this year) compared to August of last year"(MAR). This past quarter, the inventory levels in Massachusetts in comparison to last August decreased over 27%, according to MAR. Last August there were slightly over 18,700 single family homes on the market, but this August, just about 13,600 homes were available for sale. The data also shows that buyers have been buying homes significantly faster these days than they have before. Just last year, it took an average of 75 days for a home to sell, but as of this past summer, houses lasted slightly over 50 days on the market before they sold, a decrease of just under 30% of time it would take a home to sell. Buyers have been pouncing on the houses that are made available for sale and have not been delaying the closing process, but this all comes at a cost.
While on your house hunt, you may have also noticed that your money hasn't been able to buy what you thought you should have been able to afford. The MAR explains that the median price for single-family homes has increased slightly over 5%, in Massachusetts, in the past year alone. This can be explained by the supply and demand effect; as more and more buyers have been in demand for homes, and as the housing inventory decreases, the result is sharp and sudden increases in the median price of homes. Senior Economist Joe Kirchner, Ph.D recently reported similar findings on the national scale. Kirchner explains that since 2008, home affordability had dropped significantly at the beginning of the year, but has since slightly recovered and leveled off. Prices of homes has indeed increased at a rate of excess wages and salaries, which alleviates some of the pressure on affordability, but mortgages have been doing more damage to impinge affordability than the actual prices of homes have. Mortgage rates have been fluctuating over the last decade and has had a direct impact on affordability of homes, the economist explains. In this situation of affordability, Kirchner believes buyers will do one of two things: either drop out of the housing market and postpone their decision to buy, or push to buy a home faster at a price higher than they can rationally afford, which is what we may be seeing in the Bay State. Kirchner explains that, "They do this because they believe prices and / or mortgage rates will continue to rise. If they delay, they will be in a worse off situation. If they buy now, even more than they can afford, future price, they believe, will increases ensuring the value of their investment". Kirchner's findings on a national level are very similar to the trends MAR has reported to be happening in Massachusetts. Locally, the REALTOR Association of the Pioneer Valley (RAPV) has data which mocks that of the national and statewide trends, right here in the Pioneer Valley and its neighboring counties.
RAPV released a report at the end of September showing that sales in the PV alone has increased nearly 8% with an increase of median sales price of 1.2%. Franklin County showed the sharpest increase in sales to be up nearly 38%, while Hampden County had the largest increase in median home price, up a whopping 6.3% in the median cost of homes in that area, all over the span of one year. All of this data from the MAR, to Senior Economist Kirchner, to the local statistics, all report identical findings. The housing market has seen some wild activity over the past year, throughout Massachusetts and the country, with the spikes in median prices of homes, to fluctuating mortgage rates, to the decreasing availability of homes. We might be able to expect similar, yet possibly more dramatic statistics next year in comparison to this year.
If you're thinking of selling your home in the coming months, you'll want the Jones Team network of 60 REALTORS working for you. Year to date we've closed on 485 properties!
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