Is the Boston housing market showing signs of a change?
Anyone who’s bought a home in Greater Boston during the last few years might describe the experience as brutal. Unrelenting demand and a tight supply have made buying options scarce and competition ruthless, driving prices into record-high territory.
But as the summer housing market starts to give way to fall, there are signs that the pressure might be easing — if ever so slightly.
The number of homes and condominiums sold in the region climbed 6 percent in July compared with the same month last year, according to data from the Greater Boston Association of Realtors, just the second monthly increase this year. The number of homes newly listed for sale has climbed four months in a row, suggesting that homeowners are more willing to test the market and give would-be buyers something to look at. Meanwhile, some of those prospective buyers are heading for the sidelines — perhaps because they can no longer afford to stay in the hunt — which means less competition for those still looking for a home.
Taken together, these statistics may signal a housing market that is shifting slightly closer to normal, after several years of being tilted heavily in favor of sellers, said Marie Presti, who heads Newton-based The Presti Group and serves as president of the realtors association.
“The market is getting healthier,” she said. “There’s more equilibrium between buyers and sellers.”
Of course, in a market as superheated as the Boston area’s has been, “healthier” is a relative term.
The latest figures from the realtors association show the median price of a single-family home climbed to $647,680 in July, up 7.7 percent from a year ago, while condo prices surged 13.2 percent. There are so few homes on the market that, absent new listings, they’re on pace to sell out in about seven weeks, far faster than the six months that’s typically considered to be an adequate supply. The average house goes from listing to closing in 40 days.
Those are the kind of numbers generated in other scorching-hot markets like Seattle and Denver — regions similar in size to Boston — that have also seen a surge in tech jobs and a relatively tight housing stock. But in those cities, there have been signs lately that a top has been reached. Price growth has slowed, and inventory is starting to pile up as buyers simply can’t, or won’t, pay what sellers are asking.
“The nation’s pricier markets are starting to feel an affordability squeeze as buyers begin to balk at the sustained, rapid rise in prices,” said Aaron Terrazas, senior economist for real estate website Zillow. “The winds that have boosted sellers over the past few years are ever-so-slightly starting to shift.”
The change is not as pronounced here as in some Western cities, but there are indications it’s underway, real estate agents say. Properties that might have had a dozen offers a year ago now attract six. Houses sometimes linger on the market for a second weekend, instead of following the “list on Thursday, open house on Saturday, contract on Tuesday” pattern that has become the norm in desirable neighborhoods. And the number of listings with price cuts is creeping up, to 33.1 percent compared with 29.5 percent last July, according to real estate website Redfin.
Demand has dipped ever so slightly, said Eamon Kearney, a Redfin agent on the South Shore, in part because some buyers are worried about buying at the market’s peak.
“There’s some fear that we might have hit a ceiling,” he said. “We have customers looking at stories coming out of California and Seattle and [they’re] worried it might come here next. That’s probably part of it.”
There are also economic reasons for a decrease in demand. Interest rates have climbed about a half-point since last summer, making borrowing more expensive. Kearney said buyers who would have to take on a lot of debt seem more hesitant than those who could afford to pay more cash. Some are delaying making a decision on a home, so they put away more for a down payment.
“You can get into a property for as little as 3 percent down, but then you have to be able to afford the 97 percent mortgage,” Presti said. “I have seen buyers move in with roommates, or their parents, for a year or two to save money. That delays demand.”
This week’s average 30-year fixed rate mortgage rate in Massachusetts is 4.43 percent, down slightly from the previous week, according to Bankrate.com, while rates on 15-year loans are averaging 3.86 percent, a slight increase over the previous week.
Still, given the region’s strong job growth, the relatively slow pace of home construction, and a demographic wave of late-20- and early-30-somethings hitting their prime home-buying years, few real estate experts believe demand will dissipate significantly, or expect prices to fall off steeply. At least not anytime soon.
“Is this the beginning of the end? I don’t think so,” said Dana Bull, an agent with Sagan Harborside Sotheby’s International Realty in Marblehead. “Barring some catastrophe, I don’t see us heading toward a crash. I think it’ll be more like a plateau.”
Which means that while the process of buying a house in the Boston area might become a little less crazed in coming months, it probably won’t get much less expensive.