Greater Boston Real Estate Market Data, October 2012

The Single-Family Home Market:

• Following a modest 3.2 percent decline in September, sales of detached single-family homes rebounded inOctober, climbing 28 percent on an annual basis over the same month last year to nearly 800 homes sold. Its the largestpercentage increase in year-over-year sales since February when sales rose 33 percent over February 2011, and marksthe fifteenth time in the past 16 months that single-family homes sales have increased on an annual basis. Furthermore,the 793 homes sold this October is the most for the month in eight years (dating back to 2004 when 899 homes weresold), and the seventh highest sales total for the month of October on record in Greater Boston.

Notably, detached single-family home sales also increased on a month-to-month basis, rising 2.7 percent over arevised 772 homes sold in September.

The strong sales activity reflects pent-up demand that has been growing within the local housing market, and wastriggered in part by escalating rents, a sudden jump in home prices this fall, and new inventory that came onto the marketin September. Octobers sales gains also occurred despite a rise in the states unemployment rate during each of thepast four months, but because jobs have been added consumer confidence has not been significantly weakened duringthat period.

• The monthly median selling price for detached single-family homes posted its largest one month gain in twoyears last month, rising 10.3 percent on an annual basis to $430,000 in October 2012. The sharp price appreciation is theresult of an increasingly limited supply of homes for sale, plus a surge in high-end home sales, both of which have helpedto boost the median price of homes over the past year. Notably, todays tight supply of listings is producing more multipleoffer situations and thats elevating prices as evidenced by an increase of nearly 3 percent in the percent of original listprice to selling price which rose from 91.8% last October to 94.4% in October 2012. In addition, sales of homes priced ator above $800,000 rose 40 percent over the past 12 months, from 94 in October 2011 to 132 in October 2012.

Although the median selling price for single-family homes was unchanged from September, remaining stable at$430,000, improved optimism among consumers in the economy and housing market means the median selling price ofhomes is likely poised to appreciate on a steady basis in the coming year fueled by stronger buyer demand.

Historically speaking, Octobers median selling price is 20 percent below the all-time high monthly median price of$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 October declined by more than two weeks (17 days) over the past 12months to 91 days. This marks the eighth consecutive month in which the average time to sell a single-family home hasdecreased on an annual basis in Greater Boston. On a month-to-month basis, the average market time inched up by twodays from September, and is up modestly by 10 days over the two-year low of 81 days of market time that was observedfor homes sold this past July. Still, the average list time for October is a full two weeks below this years average markettime of 105 days observed during the first 10 months of 2012.
• Pending home sales rose on an annual basis for an eighteenth consecutive month in October climbing 23.4percent over the same month last year to 918 homes being put under contract. On a month-to-month basis pending salesalso increased modestly, rising 6.3 percent from September, to reverse a four month trend from June September inwhich fewer homes were placed under agreement each month.
• The inventory of detached single-family homes for sale declined on an annual basis by 32 percent in October,making this the twelfth time in the past 13 months that the number of homes on the market has declined from the samemonth one year earlier. In addition, the 3,670 homes listed on the market last month is the lowest inventory level ofsingle-family homes for sale in Greater Boston during the month of October in nine years, dating back to October 2003when approximately 4,100 homes were up for sale. Todays tighter inventory level is the result of many homeownersbeing underwater on their mortgages and unable to sell, as well as resistance among older, empty-nester households whoare waiting for their homes o regain more of their value before listing it for sale. In the near term, this means fewer homesfor home uyers to choose fro and a higher probability of competitive, multiple offer situations that buyers will face.

After experiencing a modest gain in housing supply during September, the inventory of homes for sale alsoshrunk as expressed in months of supply due to the surge in October sales activity. At the current sales pace, there was4.6 months of supply in October 2012, compared to 5.3 months of supply in September, and 8.8 months in October 2011.While the past two months are an improvement over the three months from June August when inventory stood at threemonths of supply or less, the current level is insufficient to meet the present demand for housing. In fact, a balancedmarket for buyers and sellers occurs when there is 7.5 8.5 months of supply on the market. As a result, todays limitedhousing supply is preventing an even stronger level of sales activity from taking place in many communities.

The Condominium Market:

• Condominium sales rose to their highest level for the month of October in three years, increasing 36 percent onan annual basis to 698 units sold. Its the largest percentage increase in monthly condo sales on an annual basis sinceApril 2010 during the midst of the federal home buyer tax credit program -- when sales rose 51.8 percent over theprevious April. This marks the fifteenth time in the past 16 months that condo sales have improved on an annual basis,with double-digit sales gains observed on a year-to-year basis during all 10 months of 2012. Empty-nesters, dual-incomeecho-boomer households, and investors are all helping to drive demand for condos in the current market.

Historically, last months sales total ranks as the fourth best on record for the month of October in Greater Boston,topped only by October 2004 (746 condos sold), October 2005 (742 units sold), and October 2009 (727 units sold).

• On a month-to-month basis, condominium sales did soften on in October, sliding nearly 8 percent fromSeptember, when an upwardly revised 753 condo units were sold. This decline is not unexpected given the seasonality oflocal housing markets in New England, and, notably, its a much smaller decrease than the declines of 26% and 20% thatoccurred between September and October of 2011 and 2010 respectively.
• The condo median selling price rose for a ninth consecutive month in October, increasing 4.6 percent over thepast 12 months to $365,000. The last time the monthly median selling price for condominiums increased for nineconsecutive months on an annual basis was June 2010 February 2011.

The steady rise in median selling prices over the past nine months is due in large part to a severely limitedinventory of condos sale, which is down over 40 percent on an annual basis from the same month last year, thus leadingto competitive, multi-offer bidding situations for many properties. This is evident in the increase over the past year ofroughly 2 percentage points in the amount of original list price to sales price sellers are receiving for their units, whichrose from 93.6% last October to 95.8% in October 2012. In fact, for the past six months, condominium owners in GreaterBoston have received, on average, 96.25% of the original asking price when selling their units.

Notably, as was the case in the detached single-family home market, there also was a huge spike in the upperendof the condo market in October, with the sale of luxury units priced at $800,000 or above increasing 81 percent overthe past year from 43 in October 2011 to 78 in the same month this year.

While Octobers median price is down nearly 9 percent from the record median price of $400,000 set this pastJune, it is 35 percent higher than the lowest median selling price reported in the recent market correction, which occurredin January 2009 when the monthly median price bottomed out at $270,000.

• The average time it took for condominiums to sell fell by nearly two weeks (12 days) over the past 12 months toan average of 83 days, an indication of that buyer demand is outpacing the supply of available inventory of condos forsale at the moment. The average market time for October also decreased from the previous month when it took anaverage of 85 days for the typical condo to sell during September, and Octobers average days on market is well underthe year-to-date average market time of 94 days observed during the first 10 months of this year.
• Pending sales of condominiums increased for the seventeenth time in the past 18 months, increasing 40.6percent over October 2011. This nearly matches the 40.9 percent increase in pending sales observed in September, andoffers evidence that we can expect at a couple more months of strong sales gains which should result in this being thestrongest year for condo sales in Greater Boston in five years dating back to 2007 when over 10,000 condo units weresold. On a month-to-month basis pending sales also increased by a healthy clip, climbing 14 percent from September, toreverse a four month trend from June September in which fewer condos were placed under agreement each month.
• The number of condos on the market declined for a fifteenth consecutive month in October, falling 41.6 percentto 2,391 condos for sale. The current inventory level more closely resembles the typical supply of condos listed for saleduring the winter months, and is at its lowest point in nearly nine years, dating back to November 2003 when there werealso about 2,400 condo units on the market. At the current sales pace there is roughly a 3 month supply of condosavailable for sale, which is down sharply from one year ago when there was an 8 month supply in October 2011. Theshortage of listings is putting upward pressure on prices and preventing an even stronger rebound in sales activity fromoccurring, especially in suburban communities and among empty-nesters and single first-time home buyers who are oftennot interested in home maintenance activity.