What happened to the spring market?
As Memorial Day approaches, we are entering what is typically the real estate summer doldrums. But perhaps this year no one will notice since our spring market has been so... lackluster. YTD sales in Cambridge & Somerville are down nearly 25% over the same period last year, and even going back to 2019, before the COVID buying frenzy, the difference is about the same.
Data from MLS, 5/20/2023
And while the market slowdown that happened in June of 2022 was due to buyers balking at an almost-overnight doubling of mortgage rates, the issue this spring has been more on the seller side, with people simply not listing their homes for sale. And whether that's because they're afraid they'd lose money or they are reluctant to give up their existing 3% mortgage rate, the net is the same -- there are just not very many homes to sell.
The result, of course, has been that, in a lot of cases, those properties that do hit the market are receiving multiple offers and selling well above the recent comps. Except when they're not. And this is where it gets weird.
SOME homes, are not selling right away and we're seeing more price reductions than is typical for our market. Now, whether that's because the homes were priced too high in the first place, with sellers unrealistically expecting the double-digit increases over last year's prices, as has been the trend in the past several years, or because buyers are just not as willing to *settle* or make compromises as they had been when mortgage interest rates were basically free money, is the big question. And perhaps it's a combination of the two factors.
In case you're wondering, this is not a local anomaly -- it seems to be the same across the US. The Robinhood financial newsletter Snacks summed it up perfectly this week with the headline: "Americans are bench-warming the housing market."
Perhaps we'll have a late burst of spring activity this June. Or we'll just hope for the best this fall.