Home prices were up in December, but sales dropped
The Massachusetts housing market wrapped up 2018 in strong and steady fashion. Whether it stays that way in 2019 is anyone’s guess.
The median price of single-family homes sold in the state climbed 5.5 percent last year, to $385,000, according to data from the Warren Group, while condo prices surged 7 percent, to $365,000, as a wave of new higher-end buildings opened in and around Boston. Those prices were record highs.
But price growth slowed toward the end of the year, with single-family prices flat in December, as would-be buyers struggled with a relatively small number of homes for sale, rising interest rates, and budget-busting prices. That has some experts wondering how much more steam this long-running surge has left.
“To me, it’s 50-50 as to whether prices will continue to rise in 2019,” said Tim Warren, CEO of the Warren Group, a Boston-based real estate tracking firm. “We’ve had six years of a bull market, a rising market, in real estate. Maybe it’s time for a pause.”
The biggest concern for Warren and other market watchers is extremely tight inventory, which, coupled with historically high prices, is making it hard for first-time and middle-income buyers to find a house, especially near the core of Greater Boston. Overall home and condo sales fell 10.3 percent in December, according to the Massachusetts Association of Realtors, while the number of homes on the market is down 9.2 percent compared with the same month a year prior.
“Whether it was December or all of 2018, the phrase that best describes this real estate market was ‘lack of homes for sale,’ ” said MAR president Anne Meczywor, a broker at Roberts & Associates in Lenox. “We’ll be using the same phrase to describe 2019 if we can’t do something to increase production and encourage more homeowners who are on the fence about selling to put their homes on the market.”
Then there are interest rates. The average rate on a 30-year fixed-rate mortgage has fallen in recent weeks, and, at 4.45 percent, remains low by historic standards. But it has crept up approximately 1 percentage point over the last two years, making home-buying more expensive, especially in already pricey markets such as Eastern Massachusetts. If rates rise again, Meczywor said, they could cut demand at higher ends of the market but put even more pressure on more-affordable homes, which are already in short supply.
“Interest rates are a wild card,” she said.