Home sales south of Boston ended the year strong, spurred by continued low interest rates, with prices in some areas beginning to inch up amid tight inventory and strong homebuyer interest.
Sales of single-family homes and condominiums in cities and towns in Southeastern Massachusetts rose 23 percent in the last three months of 2012, according to data from the MLS Property Information Network. The median price for the last quarter of 2012 was $314,452, up 4.8 percent from the same period a year ago, with the average number of days on the market at 121, down 28 days from the same period a year ago.
Some towns fared better than others. Home sales were strong in Braintree, Marshfield, and Weymouth, but volume fell in Carver and Hanson, said Chris Head, president of the Plymouth and South Shore Association of Realtors.
“There was a lot going on through the end of the year; even people working with buyers, they were showing houses” during Christmas week, Head said. “Part of the challenge is the inventory is so low right now. Buyers are frustrated, but they also realize they want to do something.”
Low interest rates and prices continue to drive sales, but if interest rates begin to rise the market may cool, Head said. The average interest rate on a 30-year fixed mortgage hovered around 3.6 percent at the start of this year, up slightly from a low of 3.5 percent at the beginning of December, according to Bankrate.com.
The threat of interest rates rising “doesn’t help buyers get motivated. But if they see the prices starting to creep,” they may move quicker, Head said. “A lot more buyers are starting to realize the relationship between the rise of interest rates and the loss of buying power.”
But a lack of inventory in some areas close to an easy commute to Boston is putting a damper on what could be a stronger market, he said. That lack of inventory may start to push prices up, but more expensive homes could cool off the market’s tentative momentum.
“You would think that the days on market would be shrinking quicker,” said Head. “I think we’re at a tipping point. There definitely is an opportunity for sellers to start increasing prices.”
Sales around the Braintree, Quincy, and Weymouth area are steady and properties are garnering a lot of interest, as buyers look for homes close to work and want to secure a home before prices rise, said Mike Molisse of Molisse Realty Group in Weymouth.
“For me personally, it’s been a great year. All the buyers that are out there seem to be solid buyers; they’re looking and want to make a purchase when the prices are so good,” Molisse said. “Inventory is very low right now. A lot of the houses that I have personally as listings are all of a sudden going.”
In Weymouth, there were up to 200 listings going into September, but that shrank to just 84 by the end of the year.
“Prices are climbing because there’s not a lot of inventory out there,” Molisse said. “People are looking and want to purchase. Everybody’s got the fear of the unknown — they don’t know if prices are going to go up.”
Molisse said he’s been busy all through the holiday season, “which is unheard of. Usually, it dies down after Halloween. People are coming through open houses in December, which is really rare.” A recent listing in Weymouth for $289,000 had five offers in the first day, he said.
If demand continues to be strong, the spring will be “a booming market. There’s a lot of activity out there. If people get their houses out there, they’re moving,” he said.
But John Treacy of Realty Executives Metro South in Taunton said securing financing remains a challenge for some buyers, a continuation of the tight credit that cramped business during the past few years.
“The biggest challenge today is with the financing,” he said. “Lenders are being extremely critical on all phases of the loan application process. They’ve gone from one extreme of giving loans to anyone who could fog a mirror, to the other extreme where they over-analyze the applicant info time and time again.”
Still, Treacy said he was encouraged by the strong interest in sales, and he’s been busy right through the end of the year in his area, which includes Easton, Rochester, Wareham, and other communities close to Taunton.
“The current real estate market has been very strong since spring 2012 straight through until present time,” he said. “December was my best December for sales in ten years.”