July 2021 Greater Boston Real Estate Market Update
Good times for sellers and homeowners!
The real estate market during the first six months of 2021 has been the best seller’s market and toughest buyer’s market that we have ever seen. Homeowners and sellers have seen strong price appreciation as a result of a shortage of property for sale. Intense competition between buyers has resulted in competitive bidding from buyers driving many sale prices above market value.
In early February, we predicted strong price appreciation during the first half of 2021. We predicted that prices would increase between 4 and 7 to 10 percent in many Greater Boston towns between February and June. Then the bidding wars began and we have seen asking prices bid up as much as 22 percent over asking in some case with as many as 25 offers on one house.
Challenging times for buyers, but things are looking better!
Over the last month or two, we have seen buyers getting out of the market due to “buyer fatigue” after losing multiple bidding wars. We are now seeing a second wave of buyers putting their buying plans on hold because they have to renew their leases. That is already creating an improved, but still competitive market, for buyers.
We still expect an excellent market for sellers until the supply of houses for sale increases to balance with the number of buyers for those homes. That could take a while unless interest rates increase quickly or the local economy crashes. Both are unlikely.
Not all markets are on fire
Due to COVID concerns, lack of college students and fewer foreign investors, the downtown Boston market has been a lot quieter than the many of the 40+ other outlying Boston neighborhoods and towns that we serve. If you or someone you know has been thinking of moving or investing downtown, this is the time to do it before that market picks up again. We are already seeing increases in activity there, but nowhere near the competition we have seen elsewhere.
The market is headed for stabilization, but not a crash
Markets crash when there are more sellers than buyers. That is unlikely to happen in the next year.
There is a pent up supply of homes that will probably come on the market over the next year because potential sellers have been staying out of the market due to COVID and/or concerns about being able to find their next home before agreeing to sell.
Unlike past real estate market crashes, homeowners have good equity in their homes. Many that have refinanced also have low mortgage rates and payments, making foreclosure sales unlikely in most cases. Lenders would rather work with homeowners to keep them in their homes or help them sell their homes rather than foreclose on them.
If our predictions are correct, the cost to buy due to early 2021 price increases along with potential interest rate increases later this year, should push more buyers out of the market. Although that will get us closer to a balanced market, there should still be more buyers than sellers in the market for the next year or more. Vaccinations will make more sellers comfortable about putting their homes on the market. In addition, more buyers should return to the market next year as their recently renewed leases expire.
Our advice to 2021 buyers has not changed except…
Waiting for the competitive market to cool completely is likely to be costly for you, but buying a property that isn’t right for you can be worse. Don’t be afraid to get into the market now if you are able to realistically compete with other buyers, but look at properties priced 5 to 15% below your price limit because you should still expect to get into bidding wars with other buyers and that may drive the price up. Understand that you may need to compromise a bit on your desired location, a home’s condition or size, but getting into the market now will lock in lower cost home ownership for years to come.
Our advice to 2021 sellers has not changed except…
Plan now while the market still favors sellers because getting your home ready for the market could take longer than you expect, especially if it needs a bit of updating to get the best price. With proper planning, it is possible to create a good transition from your current home to your next home.
The bottom line
The current market is complex and dynamic with many variables. It also varies considerably from town to town in the 40+ Greater Boston cities and towns that we serve. Good planning is the key to mastering the real estate market for your specific needs.
We are here to help and we are never too busy to help you or your referrals.
Questions? Concerns? Referrals? Please feel free to connect with us on our CONTACT page.
– posted 7/4/2021 by Sam Schneiderman, Greater Boston Home Team’s President & Principal Broker
