Greater Boston Real Estate Market Data, September 2012

The Single-Family Home Market:

• The number of detached single-family homes sold unexpectedly declined on an annual basis in September,slipping 3.2 percent as 25 fewer homes sold during month compared to September 2011. This is the first decrease insales activity on a year-to-year basis in fifteen months, dating back to June 2011, when single-family home sales fellnearly 14 percent from the same month one year earlier.

The modest decline in sales volume is thought to be temporary, and can be attributed in part to an increasinglylimited supply of homes for sale, some softening in consumer confidence following a rise in the local unemployment ratein August, and the desire of some buyers to wait until after the presidential election before committing to such a largefinancial purchase. Longer term, it is expected that the pace of home sales should remain strong due to todays recordlow mortgage rates and more affordable home prices, at the same time rents are rising steadily in Greater Boston.

Historically, the 759 detached homes sold this past September ranks as the thirteenth highest sales volume onrecord for the month.

• On a month-to-month basis detached single-family home sales decreased 42 percent in September from anupwardly revised 1,314 homes sold in August. While this decline is not unexpected given the seasonality of local housingmarkets in New England, the magnitude of the decrease is the largest since January 2011 when sales slid nearly 37percent from the previous month, and reflects the fact that September sales activity is being compared to an August salesvolume total that was the fourth highest of any month since the start of 2007 (a period of 68 months).
• The median selling price for detached single-family homes declined on an annual basis for the secondconsecutive month in September, slipping 4.3 percent over the past 12 months to $430,000. On a month-to-month basis,the median selling price also fell for a second straight month, declining 12 percent from $489,450 in August.

The lower median price for homes sold in September is largely a function of a softening buyer demand during thetraditional summer season, which is evidenced not only by the slower sales pace last month, but also a decline over morethan one full percentage point in the comparison between original list price to final sales price received by sellers.

Currently, the median selling price for detached homes is 20 percent below the all-time high monthly median priceof $539,000 set in August 2005, but up 23 percent from March 2009, when the median price bottomed out at $350,000during the recession.

• The average list time for homes sold in September declined by nearly two weeks (13 days) over the past 12months to 88 days. This marks the seventh consecutive month in which the average time to sell a single-family home hasdecreased on an annual basis in Greater Boston. Meanwhile, on a month-to-month basis, the average market timeremain stable from August at 88 days, which is up modestly by seven days over the two-year low of 81 days of markettime that was observed for homes sold this past July.
• Pending home sales rose on an annual basis for a seventeenth consecutive month in September climbing 31percent over the same month last year. In fact, last months improvement is the largest percentage increase in pendingsales on an annual basis in nearly three years, dating back to November 2009 when the number of homes placed underagreement rose 34 percent from the comparable month one year earlier. Even though the 873 homes that went underagreement in September is the lowest monthly total since February, the current volume of pending sales remains at astrong enough pace that it should result in this being the best year for home sales in Greater Boston since 2007.
• The inventory of detached single-family homes for sale declined on an annual basis by 30 percent for a secondconsecutive month in September, making this the eleventh time in the last 12 months that the number of homes on themarket has declined from the same month one year earlier. Although up a modest 3 percent, or 116 properties fromAugust, the 3,943 homes listed on the market last month marks the first time in 10 years that the inventory of single-familyhomes for sale in Greater Boston has dipped below 4,000 units in the month of September. Todays tighter inventorylevel is the result of many homeowners being underwater on their mortgages and nable to sell, as well as resistanceamong older, empty-nester households who are waiting for their home to regain more of thir value before listing it forsale. In the near term, this means fewer homes for home buyers to choose from and a higher probability of competitive,multiple offer situations that buyers will face.

With the arrival of the fall selling season and softening buyer demand, inventory has rebounded to 5.2 months ofsupply in September. This follows three consecutive months in which the market of homes for sales featured 3 months orless of supply. In fact, inventory dipped to an eight-year low of 2.9 months of supply in August. Nonetheless, the currenthousing supply is a full two months below last September when there was 7.2 months of supply, and is insufficient to meetthe present demand for housing. A balanced market for buyers and sellers occurs when there is 7.5 8.5 months ofsupply on the market. As a result, todays limited housing supply is preventing an even stronger level of sales activityfrom taking place in many communities. With little new home construction in the pipeline, its conceivable that the housingrecovery could stall, at least temporarily, if buyers arent provided with more new product to choose from.

The Condominium Market:

• Condominium sales rose to their highest level for the month of September in three years, increasing 13.4percent on an annual basis to 735 units sold. This marks the fourteenth time in the past 15 months that condo sales haveimproved on an annual basis, with double-digit sales gains observed on a year-to-year basis during each of the first ninemonths of 2012. Empty-nesters, dual-income echo-boomer households, and investors are all helping to drive demand forcondos in the current market.

Historically, last months sales total ranks as the fifth best on record for the month of September in GreaterBoston, topped only by September 2005 (945 condos sold), September 2004 (896 units sold), September 2003 (776 unitssold), and September 2009 (752 units sold).

Similar to the single-family home market, condominium sales did soften on a month-to-month basis in September,tumbling nearly 39 percent from August, when an upwardly revised 1,200 condo units were sold. The last time condosales declined by an equally large amount was January 2011 when sales fell 38 percent from one month earlier.

• The condo median selling price rose for an eighth consecutive month in September, increasing 1.4 percent overthe past 12 months to $372,800. The last time the monthly median selling price for condominiums increased for eightconsecutive months on an annual basis was July 2010 February 2011.

The steady rise in median selling prices over the past eight months is due in large part to a severely limitedinventory of condos sale, which is down 40 percent from the same month last year, and leading to competitive, multi-offerbidding situations for many properties. This is evident in the increase over the past year of roughly 2 percentage pointsin the amount of original list price to sales price sellers are receiving for their units, which rose from 94.2% in lastSeptember to 96.4% in September 2012. In fact, for the past five months, condominium owners in Greater Boston havereceived, on average, 96% of the original asking price when selling their units.

Although the September monthly median price is down nearly 7 percent from the record median price of $400,000set this past June, it is 38 percent higher than the lowest median selling price reported in the recent market correction,which occurred in January 2009 when the monthly median price bottomed out at $270,000.

• The average time it took for condominiums to sell fell by more than two weeks (18 days) over the past 12months to an average of 85 days, an indication of that buyer demand is outpacing the supply of available inventory ofcondos for sale at the moment. Although, the average market time for the typical condo to sell in September increased by9 days from the previous month, its worth noting that at 76 days the average listing time during August was the thirdlowest for any month in over 6 years.
• Pending sales of condominiums increased for the sixteenth time in the past 17 months, increasing nearly 41percent over September 2011. Its the largest annual percentage increase in pending sales since March 2010, whenpending sales also rose 40.9 percent from the same month one year earlier. Not surprisingly however, withcommencement of the fall market, the number of condos put under agreement declined on a month-to-month basis by 11percent to 730 pending sales, the lowest monthly total since February when 636 condos went under agreement.
• The number of condos on the market declined for a fourteenth consecutive month in September, falling 40percent to 2,568 condos for sale. The current inventory level is largely unchanged from one month earlier, rising just 1percent from August, and more closely resembles the typical supply of condos up for sale during the winter months. Atthe current sales pace there is just a 3 month supply of condos available for sale, which is down sharply from one yearago when there was a 6.7 month supply in September. The shortage of listings is putting upward pressure on prices andpreventing an even stronger rebound in sales activity from occurring, especially in suburban communities and amongempty-nesters and single first-time home buyers who are often not interested in home maintenance activity.