Greater Boston Real Estate Market Trends, March 2013

The Single-Family Home Market:

• Sales of detached single-family homes declined for a second consecutive month in March, slipping 3.7 percent on an annual basis, as harsh weather conditions this winter along with an extremely low inventory of homes for sale thwarted enthusiastic buyers and tempered sales activity. This marks the first time in nearly two years that home sales have fallen for two consecutive months on a year-to-year basis the last time being May and June 2011.

Its worth noting, however, that the decline in March home sales is less than half of the 7.5 percent decrease in sales observed in one month earlier, and based on the sharp rise in pending sales between February and March, this slowdown in sales should be temporary. In fact, despite the softening in sales in the past two months, single-family homes actually improved a modest 1.5 percent during the first quarter of 2013 as compared to the first three months of 2012. Additionally, despite the slower sales pace, the 624 detached single-family homes sold last month represents the second highest March sales total in the past six years topped only by the 648 homes sold in March 2012, and is the twelfth highest sales total on record for the month of March in Greater Boston.

• On a month-to-month basis, detached single-family home sales rose in March, increasing 44.8 percent from an upwardly revised 431 detached home sales in February. The is the first gain in month-to-month sales activity in four months, and the largest percentage increase in month-to-month home sales since June 2012 when sales rose 50.3 percent. Of course, the stronger sales pace over the past month is not a surprise given the cyclical nature of the local housing market in New England and the fact that March typically marks the start of the spring home buying season.
• The monthly median selling price for detached single-family homes increased for a sixth consecutive month in March, rising 3.7 percent on an annual basis to $430,100. This marks the first time since June November 2010 that the single-family median home selling price has risen for six consecutive months. Although last months price gain is the smallest percentage increase during the current period of rising selling prices, thats welcomed news since more modest price increases are whats necessary to keep the housing market affordable, especially for entry-level buyers.

On a month-to-month basis, the median selling price was essentially flat, climbing just 0.1 percent over the previous month. Historically, Marchs median selling price is 20.2 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 March declined by more than three weeks (23 days) over the past 12 months to 107 days. This marks the thirteenth consecutive month in which the average time to sell a single-family home has decreased on an annual basis in Greater Boston. On a month-to-month basis, the average market time also dropped slightly by two days from February when the average time on the market was 109 days.
• Pending home sales rose on an annual basis for a twenty-third consecutive month in March, climbing nearly 6 percent over the same month last year to 1,041 homes placed under contract. On a month-to-month basis, pending sales increased much more rapidly, climbing 55.8 percent from February, and are now at their highest level since July when 1,044 homes went under agreement. As is the case with the monthly sales activity, the number of pending sales is likely to rise steadily throughout the remainder of the spring market as buyer demand and the number of property listings climb.
• The inventory of detached single-family homes for sale declined on an annual basis by 41 percent in March, marking the seventeenth time in the past 18 months that the number of homes on the market has declined from the same month one year earlier. There were more than 1,900 fewer homes on the market this March compared to the same month last year, an with just 2,755 homes for sale last month its the first time since March 2004 that the inventory of single-family homes in Greatr Boston has fallen below 3,000 listings. The las time there was a smaller number of homes for sale was January 2004 when there were 2,626 homes on the market.

The inventory of homes for sale as expressed in months of supply also fell steadily in March. At the current sales pace, there was 4.4 months of supply last month, compared to 7.2 months in March 2012. A balanced market occurs when there is 7.5 8.5 months of supply on the market. Todays tighter inventory level can be attributed to many homeowners being underwater on their mortgages and not in a position to sell, few new homes being constructed, and a reluctance among older, empty-nester households to put their homes up for sale until home values recover further. As a result, buyers can expect to face more competitive, multiple offer situations this spring.

The Condominium Market:

• Condominium sales rose in March for a fifteenth consecutive month on annual basis, increasing modestly by 2.1 percent from the same month one year ago. A total of 620 condo units were sold in March 2013, which is well off the record sales pace for the month of 897 units sold in March 2007, but still the most for the month in three years, and the sixth highest sales total on record for the month of March in Greater Boston.

Sales of condominium also rose on a month-to-month basis in March, climbing 43.9 percent from an upwardly revised 431 units sold in February. This mirrors the growth in month-to-month sales in the detached home market during March. Demand for condos remains strong, especially among suburban empty-nesters looking to purchase in Boston, as well as with investors, and renters looking to become first-time homeowners, but a shortage of condominiums for sale has resulted in fewer opportunities to buy and put upward pressure on prices which is holding back even healthier activity. To this point, the March sales gain of 2.1 percent is the smallest percentage increase in sales on an annual basis during the fifteen month period of sales increases. Overall, condo sales improved 11.5 percent in the first quarter of 2013 as compared to the same three-month period one year ago.

• After experiencing a modest 5 percent decline in the monthly median selling price for condos in February, the median selling price for condominiums rose sharply in March by 19.7 percent to a new all-time high of $407,000. The nearly 20 percent jump in the median price over the past 12 months is the largest percentage increase in the condo median selling price rose 19.5 percent in November 2010 over the comparable month one year earlier. Notably, the monthly median selling price for condos has declined only twice in the past five quarters, and this past months steep gain to a new record high selling price points offer evidence of the confidence buyers have in the local housing market, as well as the upward pressure being put on prices dues to strong pent-up demand and a tight supply of units for sale.

As a result of the current market conditions the ratio of original list price to sales price sellers are receiving for their condominiums climbed improved steadily over the past 12 months from 94 percent in March 2012 to 97.6 percent this March a level not seen since April 2005 during the peak of the last housing boom.

Historically, the new record high median price of $407,000 set this March is 1.8 percent above the previous record median price of $400,000 set in June 2012, and is up 50 percent from 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 fifth consecutive month, the average time it took for condominiums to sell fell by one month or more, with days on the market down 45 days over the past year to an average of 72 days in March 2013. The average market time also fell measurably on a month-to-month basis last month, decreasing by more than three weeks (23 days) from February when it took an average of 95 days for condominiums to sell. This data offers further evidence that buyer demand is continuing to outpace the supply of available inventory of condos for sale at the moment. The last time it took less time to sell a condo was July 2012 when the average market time was 71 days.
• Pending sales of condominiums increased for the twenty-second time in the past 23 months, increasing 2 percent over the previous March to 1,028 units placed under contract in March 2013, which is the highest volume for pending sales in nine months, dating back to last June when 1,039 units went under agreement. On a month-to-month basis, the increase in pending sales of condos outpaced the rise in single-family pending sales, improving 60 percent from February.
• The number of condos on the market declined for a twentieth consecutive month in March, decreasing nearly 43 percent from March 2012 to 2,110 condos for sale. While the number of listings is up modestly by 7 percent on a month-to-month basis, the current inventory level is lowest for the month of March in more than a decade. At the current sales pace there is a 3.4 month supply of condos available for sale, which is a decline from February when there was a 4.6 month supply, and also down sharply from one year ago when there was a 6.1 month supply in March 2012. The on-going shortage of listings is expected to put upward pressure on prices this spring and is preventing an even healthier rebound in sales activity from occurring, especially in suburb communities where fewer new units are being built.