In “The Shawshank Redemption,” escaped convict Andy Dufresne writes his recently paroled best bud Red that “hope is a good thing, maybe the best of things, and no good thing ever dies.”
For prospective home buyers, the market reports released today offer that nugget of hope — but one that appears to have “no earthly business” in this housing market.
The state of the Commonwealth
The median sales prices for condos and single-family homes in the state were lower in April than they were in April 2022, according to a report from The Warren Group — by 1.2% and 3.1%, respectively.
But we need at least another month to see whether the trend will continue.
“Seems to be a statistical blip,” said Cassidy Norton, associate publisher and media relations director of The Warren Group. “The general consensus is that the high end of the market softened in February/March, which may have dropped the median prices of homes that closed in April. As well, there are so few homes for sale, a month with more on the lower end would cause a swing. Unfortunately, the issues that are holding down inventory haven’t been addressed, and until that happens, or something drastic happens in the wider economy, I don’t think prices will drop much, if at all. May’s numbers will hopefully help clarify the situation.”
It was the first drop in the median sales price for a single-family home since 2018, according to the report. The median cost in April was $553,500, and the state saw more than a 25% decrease in sales year over year. Sellers are sitting on the sidelines as high prices discourage wading into the market, inflation eats up savings, and mortgage rates remain in the sixes.
“Historically higher mortgage interest and inflation rates added an element of
caution among prospective buyers,” Norton said. “The upward pressure on borrowing costs dampened affordability and consequently tempered demand.”
Tempered demand indeed. There has been a nearly 26% drop in single-family home sales in Massachusetts in the first four months this year compared with the first quarter of 2022.
Meanwhile, the state’s condo market has experienced a nearly 27% drop in sales year to date and a more than 30% decline compared with April 2022. The median sales price for a condo was $513,500 last month.
April is crucial to the spring house hunt, making the decreases in sales all the more alarming for people who make their living in the industry.
But for home buyers, the decrease in prices and sales may indicate “a shift in demand and supply dynamics, although that may be temporary,” Norton said. “The decline may offer opportunities for potential buyers to enter the market at a more favorable price point.”
At the county level
Hampshire County saw more than half the single-family home sales it did in April 2022 (down 51.4%), while Dukes County reaped the bounty of a nearly 47% jump in sales, according to the report’s county-by-county breakdown.
Across the water, the median sales price for a single-family home in Nantucket increased the most in the state, by 14% to $1,860,000. Suffolk County saw the biggest drop in the median sales price, by 12.2% to $671,250.
The biggest decrease in condo sales was reported in Nantucket and Franklin counties, but the datasets in these areas are too small for that news to be statistically significant. Bristol County should top the list for the biggest percentage decline in condo sales, down 52.2% year over year.
The median sales price for a condo in Suffolk County — home to Boston, Winthrop, Chelsea, and Revere — slipped 5.4%, while in neighboring Middlesex County, prices inched up 2.5%.
Greater Boston by the numbers
In Greater Boston, which The Warren Group defines as the 139 communities located within Interstate 495, sales are down roughly 25% year to date and year over year for single-family homes, and the median sales price of $690,000 is 4.8% lower than in April 2022.
The median condo price declined 3% to $601,250, and sales are down 25.2% year over year and 28.6% year to date, according to the report.
“The market has been rather uneven so far this spring, with buyer activity rising and falling from week-to-week based on the timing of new listings coming to market, fluctuations in mortgage rates, and even the weather,” said Alison Socha, an agent with Leading Edge Real Estate in Melrose and president of the Greater Boston Association of Realtors, which released its own market wrap-up yesterday. “The biggest challenges remain the lack of inventory and the reluctance of homeowners to sell and give up their low interest mortgage. However, after the frenzy of the last few springs, today’s slower sales pace provides the feel of a more normal market, and that’s enabled buyers the time to proceed more cautiously, while causing sellers to consider certain concessions during this period.”
Drilling down to the towns
A look at The Warren Group’s community-by-community breakdown shows single-family home sales down by more than half year over year in Needham, and the median sales price of $935,000 in that in-demand town reflects a 34.5% decline. Sales in Brockton were down nearly 24%, while the median price inched up 1.7% to $437,450.
A look at the condo market in Cambridge shows sales down 32.4% year over year in April, with prices climbing 3.6% to $1,010,000. In Revere, condo sales plunged roughly 77%, but the median sales price hit $480,000, a 28% increase.
So what now?
It can be argued that “The Shawshank Redemption” is a story about being patient and methodical.
So let’s wait to see what the May market brings.
If you’re a prospective home buyer, consider this advice from Andy Dufresne: “If you’ve come this far, maybe you’re willing to come a little further” — or at least hold old hope that things will turn around.
