Buyers, don’t get your hopes too high about a less competitive housing market this spring.
Despite rising prices and bidding wars, homeowners remain reluctant to put up for-sale signs, creating a shortage of available properties that is frustrating buyers and real estate agents across Eastern Massachusetts. Many are crossing their fingers that a flood of new listings will materialize to ease the pressure on the market and prices as the crucial spring selling season gets underway.
But don’t count on it.
“The recent stunning lack of inventory of homes for sale is still stunning — and it’s even getting worse,” said Mary Gillach, a real estate agent at Brookline’s Gillach Group, affiliated with William Raveis Real Estate. “It’s not just in Brookline and Newton and other areas we cover. I’m hearing it from others all over.”
Tight inventories have been the story of the region’s housing market for more than a year, tamping down sales, driving up prices, and showing few signs of easing. Listings of single-family homes statewide have declined for 24 consecutive months — including a 19 percent plunge in February — while median sale prices have increased for 28 straight months, according to the Massachusetts Association of Realtors and Warren Group, a Boston real estate tracking firm.
Sales, meanwhile, have declined in each of the past three months — not for want of buyers, but of sellers, according to industry analysts.
The tight supplies have been felt most acutely in Boston neighborhoods and close-in communities, where median prices, or midpoint prices, have climbed significantly above the prerecession peak in 2005. Gillach said she recently represented a client who bid $1.4 million in cash — $300,000 over the asking price — for a four-bedroom home in Newton and waived the home inspection.
“And we still lost,” she said. “There were 15 other offers — 15 offers.”
Industry officials say a number of factors could be contributing to the supply shortage. First, construction of new homes has lagged in recent years even as the population has grown. In addition, home values have yet to regain their prerecession peak in many communities, leaving homeowners wary of selling at a loss.
Tom Grimshaw, a realtor at Gibson Sotheby’s International Realty in Boston, cited another factor exacerbating inventory woes: homeowners worried they won’t be able to find a new home at an affordable price if they sell.
One of his clients wants to sell her South End condo and move, he said, “but she’s afraid there’s no place else for her to go in the area. She’s really balking at selling. This is a very intense market right now.”
Buyers also are running into tight inventories beyond Boston and making adjustments in their house hunting plans. Gary and Kimberly Cooper, who were renting in Andover, began looking for property in Andover last fall, but quickly concluded that they weren’t going to find anything there. So their search was extended north, to Bradford, where they found a developer selling a recently built home in a new subdivision.
“My husband saw it the second it was listed, and we jumped on it,” said Kimberly Cooper. They ended up paying $457,000, a few thousand dollars above the asking price, but the Coopers feel fortunate that they nailed down a purchase without a bidding war.
“We just snapped it up,” said Cooper, who says homes in the subdivision are selling fast. “We know we’re very lucky.”
Real estate agents say the Coopers show the best advice for many buyers could be: Go West. Or North. Or South.
That can be seen through the pace at which home prices have recovered from the housing crash of nearly a decade ago and the recession that followed. Across the state, median prices at the end of 2013 exceeded prerecession peaks in about 30 communities, concentrated near Boston, according to the Warren Group.
These communities also have some of the tightest inventories, according to the realtors association. In Cambridge, where listings plunged 65 percent from a year ago, the median home price is 28 percent above the prerecession peak. In Somerville, inventory shrunk 20 percent from a year ago; the median price is 26 percent above the 2005 peak. In Newton, the median price is up 17 percent from the previous peak; inventory is down nearly 30 percent.
Listings in Boston have fallen 26 percent from a year ago while prices in some neighborhoods experienced strong gains. The median home price in South Boston in 2013 was nearly 27 percent above the prerecession peak. In Jamaica Plain, the median price is 26 percent above that peak, and in Charlestown, it’s 20 percent.
Paul Yorkis, a realtor at Patriot Real Estate Inc. in Medway, said he’s not seeing the same type of frenzied buying activity that’s going on in the immediate Boston area, where multiple offers on homes are now the norm on many sales.
In Medway, for example, the median price remains about 15 percent below the 2005 level; in Haverhill, it’s still down more than 20 percent. Even some affluent towns were still below 2005 price levels, including Wayland (down a half percent) and Sudbury (down 8.4 percent).
“It’s generally not the same outside Route 128,” said Yorkis, whose coverage area includes Hopkinton and Holliston. “Things are improving here, but it’s at a slower pace.”
That improvement, many agents hope, will start to bring out the sellers. In the past year, median prices jumped at double-digit rates in nearly half the state’s communities, according to Warren Group.
One glimmer of hope for this spring: The number of single-family homes first listed for sale increased by 4.3 percent in February, according to MAR data.
But that modest jump was offset by a 3.6 percent decline in new listings in February for condos in Massachusetts.
Peter Ruffini,a regional vice president at Jack Conway Realtor in Norwell and president of the Massachusetts Associationof Realtors, is among those who believe that more homes will come on the market, helping to restore the balance between supply and demand. He noted that the number of single-family homes first listed for sale increased by 4.3 percent in February.
“That’s our expectation,” Ruffini said. “Inventory will increase this spring.”
But others aren’t so sure. Jacquelyn Santini, a real estate agent at RE/MAX Encore in Wilmington, says her area is plagued by “incredibly low inventory,” forcing buyers to bid against each other and driving up prices.
She sees little evidence of more inventory coming on line this spring. “It’s going to be slow going, I’m afraid,” she said.