Happy 2019! After enjoying some rare downtime during the holidays, I’m back in full real estate mode today, and like so many people out there, wondering what the spring market will look like.
If you’ve been out there looking, you’ve likely noticed that not a lot was happening this past fall / early winter. This is par for the course with our seasonal cycles, where the spring is super active, summer slows down, we get a brief uptick of activity after Labor Day and then things quiet down A LOT after Halloween. And then… things pick right back up after the new year with new listings starting to hit the market, properties that came off the market over the holidays resurfacing, and the buyers getting back out there on the open house circuit.
But will this year be different? After all, mortgage rates have gone up, the stock market is being volatile, and the political climate is *tense* to say the least.
Many agents I’ve spoken with agree that fall of 2018 felt a bit slower that the past few falls, and we’ve also noticed that while certain listings were still getting multiple offers after one round of open houses, others that came on in the fall are still sitting on the market now. In some cases, the reasons are obvious — the home is overpriced, poorly marketed, needs a lot of work or is in a less desirable location — but we’ve also seen some great places that are well-priced and seem like they should’ve been snatched up right away. So what’s going on?
Nationwide, there are some markets showing signs of cooling, especially at the higher price points. In November, The New York Times described the situation as a “standoff” between buyers thinking prices have gotten too high and sellers still expecting to get those very high prices. The result has been fewer sales but sustained prices — so far, at least.
All this sounds reminiscent of the last housing slump here in Cambridgeville — around 2007 — when development slowed and homeowners who didn’t have to move, simply didn’t list their homes. The resulting decrease in inventory kept prices stable, and property values plateaued for several years, until the pendulum swung the other way and they shot back up again starting in 2012. So even in the midst of a national housing crisis, we were sitting pretty compared to many places where, as we all know, people were going underwater on their mortgages.
And a housing crisis on that scale is unlikely at the moment. The general opinion of economists who study the housing market is that while there may be a cooldown coming (I’m mostly hearing in 2020), there is no “bubble” to burst this time — the economy is still strong, we are certainly not overbuilding (in fact many markets, including ours, are still very low in inventory) and subprime mortgages are a thing of the past.
So what WILL the spring 2019 market look like here in the Boston area?
We first have to consider that the market could very well come back like gangbusters, as it has the past several springs, and we will forget we even entertained the possibility of a market shift. OR, if anything, a changing market for us would likely look something like this: not everything selling the first week it hits the market, more risk balance between buyers and sellers as fewer buyers waive all their contingencies, perhaps an end to–or decline of–offer deadlines, more negotiation between the buyer and seller sides, and slower price appreciation.
For sellers who are used to being in the driver’s seat this may all sound like bad news, but remember that homes in our market are highly in demand — from young professionals to empty nesters to foreign investors — lots of people want to buy here. In fact, an economist for Trulia recently told Boston Magazine, “Even if there were a sudden economic downturn… neighborhoods all over Boston, Cambridge, and Somerville—the ones where values have been rocketing up at 12 percent per year—are virtually recession proof.”
So, let’s see!