In Massachusetts, the number of houses put up for sale has decreased by one-third compared with last year’s same period. This has led to squeezed inventory. Some real estate companies have stated that this is the lowest month in terms of home listings supply ever to be recorded since 2004.
The combination of high prices and squeezed inventory has led Massachusetts to be ranked as the 10th-hardest state for any first-time homeowner. It has been predicted that things are not about to get easier, especially when mortgage interests have gone higher since November.
The only people who can have a sigh of relief are those renting out apartments. For the older apartments, the rent has gone down by 4 percent, averaging at $1,983 per month. According to these prices, Boston is still considered as one of the most expensive cities in apartment markets around the country. The completion of 12,000 new apartments might bring change though. There are also around 7,000 apartments under construction, which might lead to decreased rental rates in the future.
In May, which is one of the busiest months for real estate, only 3,876 houses were put on the market in Massachusetts. This is a big contrast to the previous year’s same period where 18,000 homes were on the market.
Due to this low supply, almost every home that was on the market got grabbed very fast. Some buyers even ended up paying between 10 to 20 percent above the initial asking price. While this bidding competition may tend to motivate sellers, it has brought another problem. The frenzy has left homeowners who wish to sell their houses with an unrealistic value of their property’s worth.
The availability of jobs in Boston, Massachusetts is increasing the region’s population, leading to heightened home prices and tight inventory. Sellers are being advised to rent first as they continue to hunt for replacement homes. This is a good idea as renting prices have not skyrocketed.
What to Expect from the 2017 Housing Market
Low Inventory Means Prices Will Remain High In 2017
Due to the low inventory in 2016, many homeowners ended up selling their homes at higher prices than they bought them. It has resulted in increased competition among buyers who do not even have many homes to choose from. The number of homes on the market has gone down over the past few years. In the 2006 August-October quarter, 9,619 homes were put on the market while only 1,950 homes were on the market in the August-October 2016 quarter.
With the new developments that are welcoming residents, this might change. The appreciation rate might start going up slowly as opposed to what has been experienced previously.
New Developments Will Bring New Opportunities for Buyers
With the recent new developments popping up in good locations, the picture of the market is bound to change in 2017. Different towns in Massachusetts have invested in building more homes to ease the gap between demand and supply in the housing sector. If you are looking to buy a home in this state, get a realtor to advise you on the best time and place to buy a home.
List Prices Will Come down as More Inventories Becomes Available
As the various developments continue to take place, it is right to state that the prices of buying apartments will go down. More people will be able to afford them, although interest rates might go up. Remember that it is never too late to invest in real estate, especially in a home. You will be able to reap from your investment as house prices continue to rise with time.
Mortgage Rates
Interest rates were raised in December for the second time since 2006. It is also predicted that there may be three more increases to come in 2017. This will lead to increased mortgage rates, making it more difficult for first-time homebuyers to afford the homes they have always wanted to. The rates have since started escalating. The good news is that, although mortgage rates are expected to rise, they should not exceed 4.3 percent of the previous 30-year fixed rate. It might be a great deal compared to previous ones. Raising the mortgage rates to over 5 percent would lead to fewer home sales.
Those people who already own homes will not be able to move into bigger ones if it means incurring higher interests.
Another thing, if everyone’s income were to grow strongly, they would not feel a pinch about the increasing mortgage rates. The only thing that could be affected is refinancing.
Boston, Massachusetts Rental Market Trends
On average, renting an apartment in Boston will cost you $2,770, which is a zero percent decrease from last year when the same apartment went for $2,773. For a studio apartment, you will pay $2,190 per month, $2,619 for one bedroom apartment, and $3,166 for a two bedroom apartment. All this should be good news for anyone looking to invest in real estate. Right now, there is a shortage of houses for sale in Massachusetts. One should grab this opportunity and fill this gap. The fact that you will easily get credit means that you can comfortably set up units for both the high-end clients and average people.
After all, has been said and done, it is true to say that there is hope for a better future. The government is doing all it can to make sure that anyone can afford to buy a home. Do not let the low inventory discourage you. The upcoming homes will soon be available, and they might even be more affordable.