It's time for my video newsletter of the housing market in Massachusetts. We'll look at how well home sellers and home buyers fared this year, and the factors driving pricing. We'll also talk about the election results and the impact that could have on the housing market. I also cover some interest rate discussion about where we are headed, and the impact that could have on the real estate market. Lastly, I'll discuss Bell Curve Buyers and do a forecast for early 2025 - which is right around the corner!
Transcript Follows
I noticed lots of people are checking out these videos. I will try to go over the data quickly to Understand where we're at, and where we might be going for the market, obviously, a lot of the buyers are talking about interest rates but unfortunately, The interest rates have failed to uh, stop the rise in prices, so and the reason is because there's not enough houses to go around. And because there's not enough houses to go around the number of transactions remains well below the historical, average of the last 10, 15, 20 years. I actually saw something that nationally this year we're probably on pace to sell the same number of houses, we sold in the late 1970s, even though the population is 30 percent bigger, so that sort of gives you an idea of the fact that uh there's really not enough houses to go around for everyone and it's a big problem and it's a hard problem to fix and it's not going to get fixed quickly. When you look at the data, it's right there in front of you, we're basically going to sell the same number of houses that we sold last year in 2023, but that's well down from 2022, which is well down from The 2020 levels, the 2019 level. And if you're looking for additional evidence that the market remains strong, the days on Market remains at 15 for properties, that are under agreement, that's incredibly short. There's two ways you can look at days on Market, the average days on market, for the properties that are still on the market that have not sold, and the ones that have sold. The ones that have sold are the ones that finally found a market price, and a buyer. That number to me is the most important. The most telling and that number is at 15 which is just incredibly fast, 30 45, somewhere in there would be considered a normal market and I would still expect prices to be rising if they were that long, but when you see numbers like 15, there's a lot more pressure on prices than you would think even with interest rates where they are, If you are looking for some hope, Okay. the number of rentals is up from 4,000, it's up about 20%. The number of single families is up about 70, 80 percent and so we are seeing the inventory in both areas rise. More rentals takes first-time, buyers out of the market and creates more housing for other folks. The number of single families. Obviously the more of them that are out there the less pressure there is on prices to go up, but we're still very short of where we need to be for a neutral housing market. Let alone a market where housing prices might be falling. I know that when I take buyers out we're very lucky if we can see one house a weekend like that's it. You're not I can't say oh great. Let's go out and see four houses this weekend. There's just not enough houses in your particular price and Town segment to go see four houses. There's just not that kind of inventory, The prices are up year over year. That shouldn't be a surprise to anyone at this point. But we are starting to see with a pullback from the spring super Spike, which I talked a lot about in my last report, that continues, with prices are still sort of normalizing from what was a very intense and difficult Spike for buyers to navigate. For houses that have not sold if we look at the days on market for that, uh, believe it or not, that's those are actually down both in Worcester County and Middlesex County. That just tells me this Market remains Very difficult for buyers and very good for sellers. If you're overpriced, it's getting harder and harder to sell. The buyers are getting a little bit more Discerning and a little bit, less likely are willing to overpay, I've got a bell curve coming up in a couple of slides and uh you're going to see why the amount of inventory tends to take some of that overpricing out of market. So going forward, this time of year, we don't usually see a lot of sellers between December and March. And so what that usually means is that the inventories from this point forward will probably start to get smaller. Uh, as the buyers chip away as what's there, and not enough inventory comes on to replace it. Rates have come down. And so in the springtime, that will probably increase buyers, maybe a little, maybe a lot. Um, but it's unclear. How much interest rates are going to continue to fall because the National Housing picture itself is very unsettled. And what I mean is across big chunks of the South and the Midwest, they are seeing a softening in. Uh, in pricing. Uh but up here in the Northeast and in other parts of the country it's still very very tight Market. It still favors sellers a dozen fairly acquires where other parts of the country. It's more neutral. If housing continues to deteriorate across the country, the FED will probably lower feel more pressure to lower interest rates to sort of solve that problem. Um, but if they do that, it could make things tougher up here. If they decide the housing Market's, okay, they may continue to leave interest rates where they are and allow it to continue to soften. So Really don't know what the fed's going to do. They have a much better idea of the national picture than I do. But I do keep an eye on it just to try and The game out, what it is that they might be thinking, obviously the election is, is in the past. So, uh, president-elect, Trump is headed in a lot of people might be thinking, well, maybe that will change the housing market. Presidents. Historically are not able to create Supply. They can't magically put houses on the market. I don't expect Trump will be able to do that either. They don't control interest rates, the FED does, and the FED is fairly proud and of their independent nature, and they tend not to listen to the president's overly much about what they think the economy needs. So, There aren't really a lot of good Solutions. That the president can do to affect housing in the short term long term. They can create policies that change the supply and demand, Dynamic of housing. But that's all very far down the road. It's not even in office yet. I don't expect any real changes for 2025 just because he's in the White House. So, But I, I did want to go over this. I promise I I tease this slide a little bit a couple slides ago. Um, and I know a lot of people have been saying, well, I don't understand why, why does a lack of inventory? Push prices up and it's because if you take all the buyers and you put them into a bell curve. Then when you look at the buying end of the bell car of the people who are okay, Uh, who are really active in looking to buy a house. You can break them up into three groups. So the biggest group as you can see here at the peak of the bell, curve are the people who are willing to pay fair Morgan, Okay, they look at historical prices. They have a pretty good feel for what they should pay for house and they're happy to pay it. The next group are the price pushers. These people understand what the fair market is, but they're willing to pay a little bit more. Two, maybe 3% over what fair market is because they want a house and the last two or 3% that they pay is less important to them. And then the smallest group is the market Movers. They want a house and they're not interested in competing with the price pushers or the fair market value people. They're gonna pay over what the house is probably worth because they need the house or want the house more than they need the money. Now, if you're thinking to yourself, well, who needs the house more than they need the money? Then you're not in the market, mover group. And don't feel bad. Most of us are not in that group. Okay? The market mover group is five to maybe even eight percent of the market at any one point in time. It's always there. The price pushes the market, Movers are always there in that market. But if there's enough housing for all the fair market people, and all the price pushers and all the market movers, the price pushes and Market, Movers don't have to pay extra, so they don't. But when there's not enough houses to go around, then the people who control the prices that get paid or the market movers and the price pushers, if there's not enough housing for the price pushers, the market movers do all of it and during the pandemic, the market movers were the ones who were pushing the prices up 10 percent a year. Okay. So, uh, the price pushers were sort of, in that group too. You know, honestly, a lot of people had moved into the market, mover group and were willing to pay what they need to pay in order to lock in those ultra low interest rates. So that's a strategy that so far looks to have paid off for them. You know, again typical market dynamics, we wouldn't see that, but if there's more inventory, If there's enough inventory, then the market Movers and price pushes and fair market. People do not have to pay much more than fair market value. So they don't. So what we really need is inventory, so that the market movers and price pushers, don't control the prices that are paid. So, I hope that sort of explains Uh, from the economic standpoint, why the inventory levels are so important. And why, my last couple of market reports for the last few years, have really focused on the amount of inventory that's out there. I'm gonna put a slide up that has the key vocabulary terms that I've used in here because I know sometimes I talk in industry speak and sometimes people might not be able to follow what I'm doing and as always, I do these market reports because I am an active agent in your Market, I try to give people a little idea about what's coming and I can do the same thing for your house. So if you want to be part of the market in 2025, reach out to me, I'll make sure that you get the absolute best information that you can about how to position your house in the market. That's going to be rapidly changing over the next three, four, five months. So, it could get tighter could get looser, my bet is that it will get tighter but we really won't know until we turn around and look at the inventory levels in March. All right, have a great day. Hope to see you soon.
