June 2014 Greater Boston Real Estate Market Trends Report

The Single-Family Home Market:

• Sales of detached single-family homes declined on an annual basis for a sixth consecutive month in June, though more modestly than in the three prior months, dipping 5.2 percent over year ago levels to 1,404 homes sold in June 2014. Its the lowest sales total for the month of June since June 2011 when 1,245 homes were sold and the first time since January June 2011 that home sales have fallen for six consecutive months. Despite the decline in year-over-year sales, June 2014 still ranks as the ninth busiest June on record for single-family home sales in Greater Boston.

  The persistently low supply of homes for sale locally continues to hamper sales activity, limiting options for buyers and holding back prospective home sellers from listing their home over concerns that wont be able to find another home to purchase. In addition, higher home prices which have reduced housing affordability levels over the past year, and tight credit requirements along with substantial student debt are hindering the ability of first-time buyers to enter the market.

  As a result, during the spring quarter, single-family home sales decreased 8.3 percent, from 3,344 homes sold in the three months from April - June 2013 to 3,068 in the second quarter of 2014.

• On a month-to-month basis, single-family home sales rose sharply, improving 42 percent from an upwardly revised 989 detached homes sold in May. The stronger sales pace is not unexpected however given the cyclical nature of the local housing market. By comparison, last year home sales rose 35 percent in June from one month earlier.
• The monthly median selling price for single-family homes increased for a twenty-first consecutive month in June, appreciating 5.8 percent on an annual basis to a new all-time monthly high of $576,500. This figure also reflects an 8.4 increase in median selling price from one month earlier when the price stood at $532,000 in May. The previous record high median price for any given month was $545,000, which occurred just 12 months ago in June 2013. Its the first time since April 2004 December 2005 that the single-family median home selling price has risen for such an extended period.

Although prices have now reached record levels and have risen 65 percent from their nadir during the recession ($350,000 in March 2009), buyers can take some comfort in the fact that the rate of price appreciation continued to turn more modest in June, as the increase in the median price remained in single digits for a third consecutive month and grew at its lowest rate since July 2013 when the median selling price rose 4.5 percent from the same month one year earlier.

The current period of prolonged home price appreciation is a reflection of todays healthy local economy, strong pent-up demand for homes that built up during the recession of 2008-2011 and the upward pressure being put on home prices as buyers compete for a limited supply of homes for sale. These factors enabled the typical home seller to receive nearly their full, initial asking price in June, as the ratio of original list price to sales price reached 99.1 percent for the first-time this century. Notably, this also marks the sixteenth consecutive month in which the ratio of original listing price to sales price received by sellers has stood at or above 95 percent.

• The average list time for homes sold declined by two days during the past year to 54 days this June. Its the twenty-eighth consecutive month that the average time to sell a single-family home has fallen on an annual basis. On a monthly basis, listing time also declined modestly by three days from May when homes sold in an average of 57 days.
• Pending hoe sales volume rose on an annual basis for the first time in four months in June, improving 5 percent over the past 12 months to 1,351 homesplaced under contract. However, on a month-to-monthbasis, pending sales slipped 4.4 percent from May when a downwardly revised 1,413 homes went under agreement. Notably, the 1,351 homes placed under agreement last month is a record for the month of June in Greater Boston.
• The inventory of single-family homes for sale continues to trail historic norms, declining on an annual basis by nearly 5.3 percent in June and by nearly one-third (30.3%) in the past 24 months. Its the thirty-second time in the past 33 months the number of homes listed for sale has dropped from the same month one year earlier, and with 2,879 listings on the market as of June 30 the supply of homes for sale entering July is at its lowest level in more than a decade. In addition, on a month-to-month basis the number listings dipped modestly by 3 percent from an upwardly revised 2,970 homes on the market in May.

The inventory of homes for sale as expressed in months of supply was stable over the past 12 months at 2.1 months of supply in June. A balanced market occurs when 7.5 8.5 months of supply exists, so at the current sales pace there is an insufficient supply of homes to meet demand, which is likely to frustrate buyers who lose out in competitive, multiple offer situations, and will discourage other buyers from entering the housing market.

The Condominium Market:

• Sales activity in the condo market declined on an annual basis for second consecutive month in June, dropping 4.7 percent from an upwardly revised 1,247 units closed in June 2013 to 1,188 condos sold this June. While this is the lowest condo sales total for June in three years, the sales volume this June is still the eighth highest on record for the month though the number of units sold in June 2014 is well below the record pace of 1,465 condos sold in June 2005.
• Sales also improved sharply on a month-to-month basis in June, increasing 27.2 percent from an upwardly revised 934 condos sold in May. Demand for condos remains especially strong among suburban empty-nesters looking to relocate to Boston, as well as with investors, and renters looking to become first-time homeowners.
• The median selling price for condominiums rose steadily on an annual basis for a sixteenth consecutive month in June, increasing 7 percent over the past year to a new all-time high monthly median price of $450,000. That tops the previous record high median price for any given the month which occurred this past February when the median price of condominiums sold climbed to $436,500. The last time the median selling price for condos rose for 16 straight months on a year-to-year basis was September 2004 December 2005.

Similar to the detached home market, the condo market also has been plagued by a lack of listings over the past few years and strong buyer demand is fueling much of the rapid run up in prices of late. As a result, sellers are benefitting with the percentage of original list price to selling price reaching 100.9 percent in June. That sets a new benchmark and marks the second consecutive month that percent of original list price received topped 100 percent, meaning the typical condo owner was able to sell their unit for more than the original asking price.

On a month-to-month basis the median selling price also improved, increasing 3.7 percent from May. As of June, the median selling price is up a full two-thirds (67.7%) from the lowest median selling price reported in the last market correction which occurred in January 2009 when the monthly median price bottomed out at $270,000.

• The average time for condominiums to sell remained essentially stable last month, increasing by just one day over the past 12 months to an average listing period of 44 days on the market in June 2014. This marks the first time since December 2011 that the average time to sell a condominium has increased on an annual basis. However, on a month-to-month basis, average market time declined modestly by four days from May, offering further evidence that buyer demand has remained steady and will likely continue to be strong into the summer months.
• The number of condominiums placed under agreement increased on an annual basis in June for the first time in four months and just the second time this year, climbing 7.6 percent from the same month one year ago to 1,171 units placed under contract in June 2014. Pending sales also improved on a month-to-month, climbing nearly 6 percent from a downwardly revised 1,106 units put under contract in May, a figure which offers evidence that buyer demand did not cool over the final weeks of the traditional spring market and points to healthy levels of sales activity in future months.
• The number of condos on the market declined for a thirty-fifth consecutive month in June, declining 25 percent over the past 12 months to 1,522 condos for sale, and by nearly half (48.8%) since June 2012. Like the single-family market, the current inventory of condos for sale is the lowest monthly listing total in more than a decade, and has been remained persistently below 2,000 units for sale for 15 of the past 18 months. At the current sales pace there is just a 1.3 month supply of condos available for sale, which continues a steady decline from year ago levels when there was a 1.6 month supply in June 2013. As a result, its clear that the on-going shortage of listings continues to put upward pressure on prices and is preventing an even healthier rebound in sales activity from occurring, especially in suburb communities where few new units are being built.