The spring home-buying season, marked by April open houses and May closings, is nearing its peak. This year, though, it’s been more like a bump.
The reason? There’s just not much to buy out there.
The number of homes for sale in Greater Boston — especially single-family houses in the suburbs — is at its lowest spring level in years. At the same time, attractive interest rates and pent-up demand have increased the number of people looking to buy.
For those home shopping, that means higher prices in a region already among the most expensive in the country. Last year, the median cost of a single-family home in Greater Boston climbed almost 10 percent, to $680,000, according to GBAR, the fastest clip since 2009, when the market was emerging from the prior year’s housing crash.
For would-be sellers, higher prices are not necessarily the financial bonanza they might first appear to be. You have to live somewhere, after all, and unless the plan is to downsize dramatically, or leave Greater Boston altogether for a less-expensive destination, gains from selling the old house will likely be gobbled up by the new one.
Together, these dynamics are exacerbating a supply-and-demand imbalance that has long plagued the region’s housing market, a problem magnified by the economic implications of the COVID-19 pandemic.
“The market is just frozen,” said Dino Confalone, a Cambridge real estate agent who serves as president of the Greater Boston Association of Realtors. “That’s the word I keep thinking of.”
In February, as selling season neared, there were just 975 single-family homes listed for sale in 64 cities and towns tracked by GBAR. That was down 43 percent from the same time last year, and about one-third as many as were available five years ago.
That means lines down the block at open houses for what little is available, fierce bidding wars, and a market that’s generally locked up, because people who might consider selling can’t find a suitable place to move to.
“If you’re cashing out, you’re golden,” said Jim Major, an agent with Lamacchia Realty in Woburn. “But if you’re looking to make that buy-sell move, it’s very, very intimidating right now.”
That has people who might have sold choosing instead to stay put, like Courtney Porcella and her husband, Jeffrey Cyr. A few years ago, they penciled in a move for spring 2021. They planned to sell the cozy Cape they bought in Salem five years ago, trading up to a larger space. But Porcella has been browsing for homes north of Boston recently, and doesn’t like what she’s seen. Or rather, what she hasn’t seen.
“The lack of inventory is a real factor. For us to gain 400 square feet we’d have to spend about $250,000 more than we can get for our house,” she said. “It doesn’t really make sense.”
So Porcella and Cyr, who are both 31, plan to stay for a few more years, building up more equity. Eventually, she said, they’ll buy a new home and keep the Salem house as a rental property.
The tight supply of homes for sale persists as demand surges, powered by persistently low interest rates, a recovering job market, and legions of families who dream of a suburban house to stretch out in after being cooped up in cramped apartments for a year.
Yet the roots of this spring’s supply-demand problems long predate the COVID-19 pandemic, said George Ratiu, senior economist with Realtor.com.
Greater Boston has a demographic bulge of people hitting their early 30s, which are traditionally prime home-buying years, Ratiu notes. But housing construction in the region ― particularly for suburban single-family homes and townhouses ― hasn’t kept up with demand in years. Only about one-third of the new housing permitted last year in Greater Boston was for single-family homes, according to Census Bureau data, down from half in 2005. And much of what is available sits at the high end of the market.
“We have a generational wave coming that’s even larger than the baby boomers and at the same time we’re mostly building premium and luxury products,” Ratiu said. “There’s no escaping the fact that we absolutely need to build more, especially in markets like Boston.”
It hardly comes as surprise that what does get built sells briskly. Michael DiMella, managing partner at Charlesgate Realty, has been marketing a 61-unit condominium building in Salem called BRIX. Since sales opened in November, about 70 percent of units have gone under contract — two for more than $1 million. The buyers are a mix of people moving up from Boston and North Shore empty nesters trading bigger homes for a walkable neighborhood in downtown Salem.
“Hopefully, there’s an opportunity to build more like this,” DiMella said. “There’s a strong market for it.”
The condominium market isn’t quite as tight as it is for single-family homes. Condo listings are up 17 percent compared with last year, according to GBAR. There are currently about twice as many condos for sale in the region as single-family homes. Prices have climbed, but not nearly as fast. Tours at new condo projects in Boston sharply tailed off last year because of the pandemic, said Sue Hawkes, whose firm, The Collaborative Companies, markets many new condo developments. But this spring, she’s starting to see more people ― suburban transplants, in particular ― venturing to the city to look at buying into downtown buildings.
“The empty-nesters are starting to creep back in. You can see their comfort level returning,” she said. “And we really need them to buy and sell and break up the logjam that’s affecting the whole market.”
Still, trading in an older suburban home for something closer to the city can be prohibitively expensive. Dan Smith and his wife, who are in their early 70s, have been thinking about selling their house in Auburn, near Worcester, and moving closer to their daughter in North Reading. Their four-bedroom house and its large yard would be perfect for a young, growing family.
But for now, they’ll stay put. They haven’t found anything to buy that makes financial sense. Prices have climbed in Auburn — to a median of $359,000 — but they’ve climbed just as swiftly in and around North Reading, to a median of more than $500,000. That town, like many of the suburbs ringing Boston, has become increasingly attractive to city-dwellers looking to spread out.
“Not only is there not much to buy, I just find the prices outrageous,” Smith said. “I don’t know how anyone who doesn’t make $150,000 a year can afford anything. It’s crazy.”