Greater Boston Real Estate Market Data, January 2013

The Single-Family Home Market:

• Sales of detached single-family homes rose for a fourth consecutive month in January, increasing 15.3 percent on an annual basis over the same month last year. Its the largest percentage increase in January home sales in six years and marks the eighteenth time in the past 19 months that single-family homes sales have increased on an annual basis. Furthermore, the 602 homes sold in January 2013 makes it the busiest January for home sales since 2007 when 670 homes were sold, and places this January as the tenth most active on record for home sales in Greater Boston.

The solid sales growth over the past 12 months reflects todays healthier labor market, improved housing affordability levels, and strong pent-up demand from entry-level echo-boomers, young families and others who have renting or delaying a home purchase until the market strengthen and are now eager to buy.

• On a month-to-month basis, detached single-family home sales declined in January for a second consecutive month, falling nearly 27 percent from December. The decline was not unexpected as a drop in sales activity between December and January is a common occurrence in the New England due to fewer homes being listed for sale, harsher weather conditions and diminished buyer demand during the holiday season. In fact, the decrease in sales last month is comparable to declines in the four prior years when sales fell 36%, 35%, 32% and 29% in January from one month earlier.
• The monthly median selling price for detached single-family homes increased for a fourth consecutive month in January, climbing 6 percent on an annual basis to $430,000. This is consistent with price gains of 6.8% and 5.8% in December and the November respectively, and marks the first time since August November 2010 that the single-family median home price has risen for four consecutive months.

Steady buyer demand, along with a dwindling supply of homes for sale, and fewer distressed property sales, have all contributed to the appreciation in home prices over the past year. As noted in recent months, todays limited inventory levels is producing more multiple offer situations and thats elevating prices as evidenced by an increase of nearly 4 percent over the past year in the ratio of original list price to selling price which rose from 90.5% last January to 93.8% in January 2013. In addition, sales of homes priced at or above $1 million rose by nearly one quarter (24%) during the last 12 months (from 70 in January 2012 to 53 in January 2012).

However, compared to the previous month, sales of homes priced at or above $1 million slid by a third (33.3%) in January, and that is reflected in an 8.5% decrease in median selling price from December, which stood at $470.000.

Historically speaking, Januarys median selling price is 20 percent below the all-time high monthly median price of $539,000 set in August 2005, but up nearly 23 percent from March 2009, when the median price bottomed out at $350,000 during the recession.

• The average list time for homes sold in January declined by three weeks over the past 12 months to 109 days. This marks the eleventh consecutive month in which the average time to sell a single-family home has decreased on an annual basis in Greater Boston. However, on a month-to-month basis, the average market time rose by slightly more than a week (12 days) from December. This can be attributed to the normal softening in home buyer demand during the holiday period. The average list time for single-family homes sold in January is the highest in nine months dating back to April 2012 when homes sold in an average of 120 days, but it likely that market time will diminish as buyer activity picks up with arrival of the spring housing market.
• Pending home sales rose on an annual basis for a twenty first consecutive month in January, climbing 8 percent over the same month last year to 584 homes placed under contract. However, on a month-to-month basis, pending sales declined 2.5 percent from December and are now at their lowest level in 12 months, dating back to January 2012 when 540 homes went under agreement. As is the case with the monthly sales activity, the number of pending sales also is being hindered by low inventory levels, but should rebound in the coming months with advent of the spring market.
• The inventory of detached single-family homes for sale declined on an annual basis by 34 percent in January, makin it the fifteenth time in the past 16 months that the number of homes on the market has declined from the same month one year earlier. There wee more tan 1,200 fewer homes on the market this January compared to the same month last year, and the 2,407 homes listed for sale is the lowest inventory of single-family homes in Greater Boston in the month of January since 2004 when 2,486 homes were on the market. Todays tighter inventory level is the result of many homeowners being underwater on their mortgages and not in a position to sell, as well as reluctance among older, empty-nester households to put their homes up for sale until home values recover further. In the near term, this means fewer homes for buyers to choose from and a higher probability of competitive, multiple offer situations buyers will face.

The inventory of homes for sale as expressed in months of supply also fell sharply in January. At the current sales pace, there was 4 months of supply last month, compared to 7 months in January 2012, a level that is insufficient to meet the present demand for housing. A balanced market for buyers and sellers occurs when there is 7.5 8.5 months of supply on the market. The listing supply level is now at its highest level since October (which had a 5 month supply of homes for sale) due to Januarys slower sales pace compared to the prior two months. Nonetheless, it remains true that todays tight housing supply is preventing stronger sales activity from occurring in many communities.

The Condominium Market:

• Similar to the single-family market, condominium sales rose steadily in January to their highest level for the month in six years. A total of 504 condo units were sold in January 2013, an increase of 22.3 percent over the previous Januarys sales volume and the most since January 2007 when 638 units sold. This marks the thirteenth consecutive month in which condo sales have improved on an annual basis, with double-digit sales gains observed in each of those months. Empty-nesters, entry-level buyers, and investors are all helping to boost activity in the condo market.

On a month-to-month basis, condo sales tumbled 34 percent from an upwardly revised 765 units sold in December, but, again, its typical for sales to decline between the final month of a year and initial month of each new year due to the seasonal nature of the housing market in New England.

Historically, Januarys sales total ranks as the fourth best on record for the month of January in Greater Boston, topped only by January 2005 (655 units sold), January 2007 (638 units sold) and January 2006 (531 units sold).

• The condo median selling price rose for a twelfth consecutive month in January, increasing 3.5 percent over the past 12 months to $367,250. Although its the smallest percentage increase in the monthly median price since September when the median price rose 1.4 percent, the slow, steady rise in the median selling price is welcomed by industry experts as its much better for the health of the market than double-digit appreciation rates which discourage some buyers and price others out of the market. The last time the monthly median selling price for condominiums increased for 12 consecutive months on an annual basis was January December 2005.

The steady rise in median selling prices over the past year is due in large part to a severely limited inventory of condos for sale, which is down over 40 percent on an annual basis from the same month last year, thus leading to competitive, multi-offer bidding situations for many properties. This is evident in the increase over the past year of 3 percentage points in the ratio of original list price to sales price sellers are receiving for their units, which rose from 93 percent in January a year ago to 96 percent in January 2013.

Notably, as was the case in the detached single-family home market, there was a huge spike in the upper-end of the condo market in January, with the sale of luxury units priced at $800,000 or above climbing 52 percent over the past year from 33 in January 2012 to 50 in the same month this year, while the number of condos valued at $1 million or more is up 89.5 percent over the past 12 months from 19 last January to 36 in January 2013.

However, compared to the prior month, sales of condos priced at or above $1 million fell roughly 43 percent in January, and that is reflected in a 4 percent decline in median selling price from an upwardly revised $383,000 in December. Furthermore, while Januarys median price is down a modest 8 percent from the record median price of $400,000 set last June, it is 36 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.

• For the third consecutive month, the average time it took for condominiums to sell fell by more than one month (37 days) over the past year to an average of 88 days, an indication that buyer demand is continuing to outpace the supply of available inventory of condos for sale at the moment. While January was the ninth consecutive month that the average time to sell remained under three months, on a month-to-month basis the average market time did rise slightly in by four days from December, and is now at its highest level in nine months dating back to April when it took an average of 98 days for condominiums sold that month to sell..
• Pending sales of condominiums increased for the twentieth time in the past 21 months, increasing 28 percent over January 2012, which represents the largest percentage increase in pending sales on an annual basis in three months. On a month-to-month basis, pending sales also increased nearly 22 percent from December, rebounding from a downwardly revised 12 month low of 507 condos put under agreement in December to 618 in January 2013.
• The number of condos on the market declined for an eighteenth consecutive month in January, falling 42.3 percent from the prior January to 1,715 condos for sale. While the number of listings is up modestly by 4.4 percent on a month-to-month basis, the current inventory level is lowest for the month of January in more than a decade. At the current sales pace there is a 3.4 month supply of condos available for sale, which is down from a 4.4 month supply in December and sharply from one year ago when there was a 7.2 month supply in January 2012. The shortage of listings is putting upward pressure on prices and preventing an even stronger rebound in sales activity from occurring, especially in suburban communities and among empty-nesters and single first-time home buyers who are often not interested in home maintenance activity.