So here we are on April 18, squarely in the middle of what is traditionally "peak" spring market. And yet things feel really slow. I've heard from agents anecdotally that they are feeling the same, but decided to take a look at the numbers to see if they play out. Here's what I found:
In Cambridge, our YTD pending and sold single-family homes have been shockingly consistent every year for the last several years. Going back to pre-COVID 2019, we've been at 35 or 36 homes pending/sold every year by April 18, with the exception of last year, where the number hit a whopping 38. I don't know why, but I find the consistency really surprising.
In Somerville, we have much more fluctuation in single family homes pending or sold by this date. This year we're at 22 -- same as where we were in 2020 (just coming out of the COVID shutdown), while last year we were at 17, in 2022 we were at 15, in 2021, 26, and in 2019, 34. So no obvious trend here.
On the other hand, with condos (the bulk of our housing inventory), there is a very clear trendline in both Cambridge and Somerville, with the number of units pending and sold by April 18 decreasing every year since the COVID-driven craziness in 2021. The good news, I suppose, is that we are very slightly over YTD 2020 when the government shutdown put a brief freeze on the market in early spring. But as we know, that turned into a buying/selling frenzy later in the season and through the end of the year, so guessing by YE24, we'll be down over that year too. And we're substantially down from 2019, our last "normal" year before COVID -- by 30% in both cities.
So what's going on here?
With the big caveat that I am not an economist, in my opinion it's the confluence of several factors negatively impacting the real estate market:
the still high mortgage interest rates combined with housing prices that have been increasing by 5, 10 and even 20% year-over-year going back to 2012 making homebuying a very pricey proposition
current homeowners feeling stuck -- not wanting to give up their current low mortgage and also seeing very few options for a new home, given the low inventory (this is a vicious cycle)
the geopolitical landscape, combined with being in an election year leaving everyone feeling uneasy
job/economic uncertainty due to recent layoffs by major tech and biotech companies, which are a major part of our local economy
perhaps some concern and confusion over the real estate commission lawsuits leaving buyers worried they'll have to pay their agent fee, adding yet another big expense when they buy
and finally, it seems to me that a lot of people who bought and/or sold during COVID were really just speeding up moves they would have maybe made a few years down the road -- lots of young families moving from their starter condos to the single family homes with yards that were so in demand during the pandemic, others moving geographically to be closer to family, etc. -- so perhaps much of the 2020 and 2021 activity would be happening now, had it not been for COVID
Again, just my thoughts...