Greater Boston Real Estate Market Trends, April 2013

The Single-Family Home Market:

• After declining during each of the two previous months due to low inventory levels and several late winter storms that slowed home buyer activity, single-family home sales rebounded in April. Sales of detached single-family homes rose 4 percent on an annual basis to 773 detached homes sold in April 2013, the highest sales total for the month in three years (dating back to April 2010 when the federal home buyer tax credit was available and 822 homes were sold) and the second most home sales for the month of April since the most recent housing boom ended in 2005. Historically, the 773 homes sold in April 2013 is the eighth highest sales total for the month of April on record in Greater Boston.

Significant pent-up demand for housing, especially among entry-level and trade-down buyers, combined a steadily improving labor market, record low mortgage rates, and rising home values have helped to drive strong buyer activity early this spring and should result in solid gains in home sales for much of the rest of this year.

• Detached single-family home sales also increased on a month-to-month basis, increasing 22.9 percent from an upwardly revised 629 detached home sales in March. Last months sales gain exceeds the 14 percent increase in monthto- month sales between March and April 2012, due in part to this years slower start to the spring market. 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. Still it is noteworthy given the sharply lower inventory level of homes for sale in this years spring market.
• The monthly median selling price for detached single-family homes increased for a seventh consecutive month in April, rising 13 1/2 percent on an annual basis to $475,000. Its the largest percentage increase in the monthly median selling price on an annual basis in three years, dating back to April 2010 when the median selling price jumped 13.9 percent from the same month the previous year. Additionally, this marks the first time since May November 2010 that the single-family median home selling price has risen for seven consecutive months.

Notably, the median selling price for detached single-family homes is now at its highest level in eight months, dating back to August 2012 when the median price reached $490,000. The spike in the median selling price along with the sharp jump in the median price over the past 12 months can be attributed to todays tight supply of homes for sale which is increasingly producing competitive multiple offer situations that help to drive up home prices, as well as a measureable increase in sales of homes priced at or above $1 million, which rose by more than one-quarter (27%) over the past year (from 78 in April 2012 to 99 in April 2013).

On a month-to-month basis the median selling price also increased, but by a slightly more modest 10.5 percent from a downwardly revised $430,000 in March. Historically, Aprils median selling price is roughly 12 percent below the all-time high monthly median price of $539,000 set in August 2005, but up 35 percent from March 2009, when the median price bottomed out at $350,000 during the recession.

• The average list time for homes sold in April declined by nearly four weeks (26 days) over the past 12 months to 94 days, the shortest list time in five months (November 2012 89 days) that it has taken detached homes to sell. Its the fourteenth 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 steadily by almost two weeks from March when the average time on the market was 107 days.
• Pending home sales rose on an annual basis for a twenty-fourth consecutive month in April, climbing 25.5 percent over the same month last year to 1,433 homes placed under contract. Its the most single-family homes under agreement in a single month in the last six years, and comparable to the 1,417 that were under contract in May 2007. On a month-to-month basis, pending sales increased even more substantially, climbing 38.3 percent from March.
• The inventory of detached single-family homes for sale declined on an annual basis by 40 percent in April, marking the eighteenth time in the past 19 months that the number of homes on the market has declined from the same month one year earlier. There were nearly 1,900 fewer homes on the market this April compared to the same month last year. Furthermore, with just 3,141 homes for sale its the fewest number of detached single-family homes for sale in the month of April in nineyears, dating back to April 2004 when there were approximately 3,400 homes listed on the market. However, that said, the 3,141 homes for sale in April is he most in five months (3,370listings in November 2012).

The inventory of homes for sale as expressed in months of supply also fell steadily in April. At the current sales pace, there was 4.1 months of supply last month, compared to 6.8 months in April 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 April for a sixteenth consecutive month on annual basis, increasing a healthy 6 percent from the same month one year ago. A total of 804 condo units were sold in April 2013, which is well off the record sales pace for the month of 956 units sold in April 2005, but still the most for the month in three years, and the fifth highest sales total on record for the month of April in Greater Boston, surpassed only by April 2005 (956), April 2004 (892), April 2007 (823), and April 2010 (806).

On a month-to-month basis sales of condominium also rose in April, climbing 27.8 percent from an upwardly revised 629 units sold in March. This mirrors the growth in month-to-month sales in the detached home market in April.

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.

• After experiencing just the second decline in the monthly median selling price in five quarters in February, the median selling price for condominiums increased on an annual basis for second consecutive month in April, climbing nearly 5 percent to $389,000. Although Aprils median selling price reflects a drop of 4 percent from the prior month, it is important to note the median selling price for condos hit a new record high in March of $405,500 (which is downwardly revised from $407,000.)

Accordingly, confidence among buyers in the local housing market remains strong. Evidence of this can be seen in the ratio of original list price to sales price sellers are receiving for their units which improved steadily over the past 12 months to a record high 98.8 percent in April. This tops the previous return of 98 percent of original list price observed during the peak of the last housing boom in June 2005.

While Aprils median price of $389,000 is down a modest 4 percent from the record median price set earlier this year, it is worth noting that has improved 44 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 sixth consecutive month, the average time it took for condominiums to sell fell by one month or more, with days on the market down 35 days over the past year to an average of 63 days in April 2013. The average market time also declined on a month-to-month basis last month, decreasing by more than one week (9 days) from March when it took an average of 72 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 September 2012 when the average market time was 62 days.
• Pending sales of condominiums increased for the twenty-third time in the past 24 months, increasing 28 percent over the previous April to 1,343 units placed under contract in April 2013, which is the highest volume for pending sales in a single month in the past six years, dating back to May 2007 when 1,471 units went under agreement. On a month-tomonth basis, the increase in pending sales of condos was comparable to the annual increase, improving 30.6 percent from 1,028 units put under contract in March.
• The number of condos on the market declined for a twenty-first consecutive month in April, decreasing by nearly 40 percent from April 2012 to just over 2,300 condos for sale. While the number of listings is up modestly by 6.7 percent on a month-to-month basis, the current inventory level is lowest for the month of April in more than a decade. At the current sales pace there is a 2.9 month supply of condos available for sale, which is a decline from March when there was a 3.5 month supply, and also down sharply from one year ago when there was a 5.1 month supply in April 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.