Buyers wading into the real estate market this year better buckle up, because if 2016 was any indication, it’s going to be even bumpier this year.
Home shoppers in Boston-area communities especially should prepare for yet another year of slim pickings, overcrowded open houses, and bidding wars, real estate brokers say.
Early birds hoping to beat the traditional spring rush by house-hunting in the winter are already encountering the harsh reality that they are far from alone. Blame it on a mix of mild weather and frustration.
“I feel that there’s more buyers now than typical years in the winter months,” said James Gulden, a Metro Boston agent for real estate brokerage Redfin. “The kind of seasonal aspect of things has gone out the window due to these low inventory levels.”
The home sales figures for 2016 confirm an all too-familiar trend: Sales were up, but there was less to choose from, and what was available was usually more expensive.
The median price of a single-family home sold in Massachusetts in 2016 was $345,000, up 1.5 percent from the previous year and $10,000 shy of the peak recorded in 2005, according to data released Tuesday by the Warren Group. The 60,751 single-family homes sold in 2016 marked an 11.3 percent rise in homes sold over 2015.
Condos fared a bit better, with the statewide median price rising 4.1 percent to $329,000, the Warren Group said.
But in Greater Boston, where demand is highest, the single-family and condominium markets closed the year with much higher prices, according to a separate report released Tuesday by the Greater Boston Association of Realtors.
The median sale price of a single-family home in Greater Boston was up 5 percent, to $540,000. Condos in the region sold for a median $485,114, 8 percent higher than the previous year, according to GBAR.
And competition was strong: Both home and condo listings in the region spent four fewer days on the market than in 2015.
“It’s been the same story the past two years,” Gulden said. “Every time I’m expecting the competitiveness to ease a little bit, but every year it becomes more of a seller’s market.”
As expected, the trends were more acute in Boston proper, where 2016 median prices rose 9 percent to $561,000, according to GBAR.
Possibly the most defining feature of the local home market remains just how few homes there are to buy. December marked the 59th straight month of year-over-year decreases in the number of single-family homes for sale, the Massachusetts Association of Realtors said in a report Tuesday. It was the lowest inventory of homes on record in 12 years, said Paul Yorkis, president of the association.
“That is not a good situation because the supply, instead of keeping pace with demand, is falling further and further and further behind,” Yorkis said. “There’s a real concern in the realtor community on what 2017 is going to look like. . . . We’re experiencing a real serious problem.”
With interest rates continuing to climb, potential sellers who have locked in historically low rates might be reluctant to list their homes and join the buyers’ fray, Gulden said.
“I’m seeing people renovating instead of moving,” he said.
This is bad news for buyers who, in the hopes of becoming more competitive, feel under pressure to make concessions ranging from waving contingencies to expanding their search area when they find themselves priced out of their initial target community, Gulden said.
But as more people head further out, the higher prices follow.
A $1 million-plus property has become the norm in such tony neighborhoods as Cambridge and Charlestown, but prices are also rising rapidly in fast-gentrifying communities such as East Boston and South Boston. Among the near suburbs, prices in Braintree were up 11.4 percent last year to a median of $431,000 for a single-family home. And in Everett, where a casino is slated to open in 2019, the median sale price of a single-family rose 15.4 percent to $355,000.
Even in old industrial cities such as Brockton and Lawrence, where homes are much less expensive, home prices increased 10 percent in 2016, to the $250,000 range.
There are some uncertainties on the horizon, namely, what happens to mortgage rates. They have drifted up from mid-year lows, and could go yet higher if policy makers at the Federal Reserve Bank continue to raise interest rates. Against that backdrop, Tim Warren, chief executive of the Warren Group, questioned whether home prices would continue to rise by much in 2017.
“I’m sort of thinking that the market has reached its prior peaks,” Warren said. “I think it’s not beyond the realm of possibility that the real estate market could plateau or level off.”