Sellers still on sidelines, but why?
Despite reports of bidding wars, new listings have risen only slightly over the past year
When their third child was born nearly a year ago, Lindsey and Matt Perrin knew it was time sell their Bedford home and find something with space for a growing family. But worries about the real estate market — Would they find buyers? Could they get their investment back? — made them hesitate.
They let the spring selling season pass as the three-bedroom home got tighter and tighter. Finally, at the urging of their real estate agent, they put their home on the market in September, then worried the $535,000 listing price was too high.
Four days later, they received five offers, accepting one that was over their asking price and more than $60,000 above what they paid for the home in 2008. "We were shocked," said Lindsey Perrin.
Real estate agents hope that such stories will bring out more sellers, who remain in short supply even as buyers crowd open houses and prices rise quickly. Despite regular reports of multiple offers and bidding wars, new listings have risen only slightly over the past year, according to the Massachusetts Association of Realtors, far from enough to keep up with surging demand.
So what is keeping sellers on the sidelines?
Industry analysts say they are unsure. Sellers may remain uncertain about the housing recovery. They could be waiting for prices to go higher. Or they might worry about finding new homes after selling their old ones.
"It really is baffling that all this excitement about homes that are selling for over asking price hasn't brought people out to sell," said Timothy Warren, chief executive of Warren Group, a Boston real estate tracking firm. "People are still having babies, becoming empty nesters, getting new jobs, needing to buy new houses."
Warren said that buyers, who delayed home purchases during the recession, are returning to the market in droves, spurred by an improving economy and rising mortgage rates. He estimates there's an unmet demand of about 100,000 homes in Massachusetts — about two years of sales at current rates.
In other words, it's good to be a seller.
Statewide, sales jumped 14 percent in August, and the median price climbed 11 percent from a year earlier, according to Warren Group. In central Boston, 40 percent of condos sold in August went for more than the asking price, according to LINK, a Boston company that tracks local condo sales.
In one Cambridge neighborhood, near Porter and Davis squares, 22 of 25 homes purchased over the past six months, sold above asking — including a two-family home that went for $237,000 above the listed price, or nearly 40 percent more than the seller sought, according to an analysis by Weichert Realtors, Channing Real Estate in Cambridge.
Ryan Wilson, a real estate agent with Keller Williams in Newton, said roughly 70 percent of the homes he has sold in recent months have fetched prices over the list price, including properties in Framingham, Canton, Medford, and Sharon.
"We're not in a depressed market anymore," Wilson said.
Steve Brunelli and his wife, Celina D'Cruz, who have three children, ages 5 to 9, began thinking about more space and selling their three-bedroom home in Needham at the end of the spring. They decided to wait until September to put it on the market.
Over the course of two open house showings, more than 30 groups strolled through the two-story Colonial, admiring shiny hardwood floors, a brick fireplace, spacious kitchen with granite countertops, and a large patio and backyard, where children waited for parents. Some couples, after seeing the house Saturday, returned Sunday, stepping outside to huddle with brokers about making an offer.
By Monday, Brunelli and D'Cruz, had received seven offers, five over the listing of $724,900. They accepted an offer over that price, but declined to disclose the amount.
Brunelli said the last house they put on the market, in Philadelphia just before the housing bubble burst, took about eight weeks to sell."We didn't know how much this would deviate from the past experience," Brunelli said. "The fact that it all happened so quickly, it was a pleasant surprise."
Eventually, as these types of surprises are repeated, more people will be willing to sell, helping to increase supply and moderate the pace of price increases, said Michael Goodman, an economic analyst and chairman of the department of public policy at the University of Massachusetts Dartmouth.
"As prices rise, it should encourage sellers, some of whom were waiting until prices rose a little more to put their house on the market," said Goodman. "It should create an incentive for potential sellers to be actual sellers."
Housing markets are very local, and not all communities have experienced the recent burst of sales and rising prices. Much of the hottest activity has been concentrated in desirable Boston neighborhoods and close-by suburbs.
In Arlington, said Seamus McGrath, a broker with Bowes Real Estate, homes of all types are selling quickly, including multifamily properties, single-family homes, and condominiums.
"If something is priced close or correctly, and the property's in good condition, it'll get attention," McGrath said.
McGrath was the broker in the recent sale of a three-bedroom, two-bathroom home at 58 Scituate St. in Arlington. Over the course of a weekend earlier this month, more than 90 groups walked through the property during two open houses. By Monday, the sellers had six offers, most of them over the asking price of $598,000, according to McGrath.
"We wanted to strike while the iron was hot," said Roshan Pai, who, with his wife, Priya Nalkur-Pai, sold the Scituate Street home to move to a bigger house to accommodate their two growing children. "We listed it at the right time, and had a pretty amazing response."
But quickly finding a buyer has created a new problem for the family: finding another home in a market that still has low inventory. "We didn't completely think that through," Pai acknowledged. "For now, [mortgage] rates are low, but God knows what's gonna happen next."