The Latest Take on the Residential Real Estate Market
Soaring prices and lack of inventory
As expected, the COVID-19 pandemic continued to impact the Massachusetts housing market. Due to soaring prices and lack of inventory, fewer people were able to purchase homes than perhaps would have been able to under different circumstances. According to the Massachusetts Association of Realtors, the median sales price for a single-family home in 2021 was $525,000, a 10.5 percent increase from 2020. Nationally, a record eight percent of homes are worth more than $1 million. At the same time, housing inventory decreased significantly from 2020, with 45.5 percent fewer homes available to purchase each month. With many prospective homebuyers out of work due to the pandemic, and others unprepared for the steep increase in housing prices, saving for a down payment has been difficult, and for some, impossible.
Although prices have finally leveled off after increasing consistently for the past 18 months, we’ll continue to face some of the same housing challenges in 2022. For starters, there continues to be more demand than supply as we head into spring homebuying season. Currently, fewer than 5,000 homes are listed for sale in Massachusetts, far lower than any of the previous three years. However, as COVID numbers and unemployment rates decrease, prospective homebuyers who paused their housing searches in 2020 are now resurfacing and eager to buy. If the inventory remains low, prices will continue to stay high.
Major city exodus
While the rate has slowed, many homebuyers continue to flee major cities like Boston to purchase larger homes in the surrounding suburbs. Nationwide in 2021, more people moved out of urban areas than moved in, a lasting consequence of the pandemic, and one that has continued to impact housing migration trends in 2022. Originally, individuals and families left major cities not only out of fear, but also out of a necessity for more space amidst office closures and stay at home orders. Now, with 82 percent of organizations in Massachusetts remaining at least partially remote indefinitely, homebuyers are even more focused on extra space and household amenities, and less concerned with workplace proximity.
"Prospective homebuyers who paused their housing searches in 2020 are now resurfacing and eager to buy."- Robert Cashman
On top of record-high housing prices, the average rate on a 30-year mortgage increased to 4.14 percent this week, a significant spike from the all-time low of 2.93 percent in January 2021. Experts predict that the rates will continue to rise throughout the year. This, combined with rising gas prices due to the war in Ukraine as well as other consequences of inflation, will make it even harder for some prospective homebuyers to enter the housing market in 2022.
In response to the competitive market, there are steps organizations, including Metro, have taken to help prospective buyers reach their home ownership goals. Last month, we introduced the 40-Year Mortgage, an initiative designed to make mortgages more affordable by offering low down payment options and lower payments across a longer period. Plus, we’re always committed to educating our members on the latest housing trends and guiding them toward making better financial choices through one-on-one conversations, seminars, and the wide range of resources available on MetroCU.org.
As we head into the busy spring housing market, I recommend that prospective homebuyers remain patient, stay educated, and explore the many different options and resources available to assist in making their home ownership goals a reality.