February 2015 Greater Boston Real Estate Market Trends Report

The Single-Family Home Market:

• Sales of detached single-family homes rose on an annual basis for a third consecutive month in February, increasing 5 percent from 520 homes sold last February to 546 homes sold in February 2015. Despite a persistently low inventory of homes for sale and seasonal interruptions, buyer demand remained strong due primarily to near record-low mortgage rates, a steadily improving job market, and more temperate weather over the final quarter of the year compared to one year earlier. Historically, this Februarys sales volume ranks as the tenth best on record for the month of February in Greater Boston, matching the sales total in February 2013.
• On a month-to-month basis, sales fell 26 percent in February from an upwardly revised 738 homes sold in January. However, the decrease is typical for this period as demand traditionally drops from January to February due to the seasonal nature of the local housing market. In fact, last months sales decline is comparable to those in three of the past four years when sales fell 29%, 27.3%, 9.6%, and 25.5% in February from one month earlier.
• The monthly median selling price for single-family homes rose for a fifth consecutive month on an annual basis in February, increasing nearly 8 percent from a median price of $407,450 last February to $439,500 in February 2015. The median home price has now increased on an annual basis in 28 of the past 29 months (dating back to September 2012).

The median selling price did decline modestly on a month-to-month basis by 2 percent from a median of $448,500 in January. However, last months median home price of $439,500 is the still the highest ever recorded during the month of February in Greater Boston, reflecting todays tight inventory levels and improved optimism about the economy and housing market. Notably, February marks the twenty-fourth consecutive month in which the ratio of original list price to sales price received by sellers has stood at or above 95 percent.

As of February, the median selling price is up nearly 41.8% from March 2009, when home values bottomed out at $309,950 during the recession.

• After declining for 28 consecutive months from March 2012 June 2014, the average market time for homes sold has now increased for eight consecutive months in Greater Boston. Single-family homes sold in February 2015 were on the market an average of 105 days, or roughly one and a half weeks longer than last February when the typical home sold in an average of 94 days. Market time also increased by more than two weeks on a month-to-month basis from an average of 90 days in January. This reflects the largest amount of listing time for a home to sell in nearly two years, dating back to March 2013 when the typical home was listed on the market for an average of 111 days.
• Pending home sales decreased on an annual basis for the first time in six months during February, sliding 7 percent from the same month last year to 735 homes placed under contract. Additionally, on a month-to-month basis pending home sales also declined by 3.2 percent from an upwardly revised 759 homes placed under contract in January.
• The inventory of single-family homes for sale continues to trail historic norms, declining on an annual basis by 29 percent in February and by more than one-third (39%) in the past 24 months. With just 1,992 homes listed for sale as of February 28, the supply of homes on the market is at its lowest level in more than a dozen years. Additionally, on a month-to-month basis, the supply level also decreased 14.8 percent from an upwardly revised 2,337 homes on the market at the end of January.

With less than 2,000 listings on the market as of February 28, the supply of homes for sale is at its lowest level in over a dozen years. Exacerbating the situatio is the fact that the number of new listings coming on the market fell 38 percent in February compared to the same month last year,and by 22 percent from one month ealier (January 2015).

This data offers clears evidence that there is not a sufficient amount of inventory to keep up with buyer demand, as permitting for new homes remains low and current homeowners remain reluctant to list their home for sale either because they owe more on their mortgage then their home is worth or they are fearful of not being able to find another home to purchase due to the lack of homes for sale.

Inventory as expressed in months of supply also declined sharply last month to 3.6 months in February from 5.4 months of supply in February 2014, but improved modestly from 3.2 months of supply in January. In a balanced market 7.5 8.5 months of supply exists, so at the current sales pace there is a woefully insufficient supply of homes available to meet buyer demand.

The Condominium Market:

• Sales of condominiums declined on an annual basis for a fourth consecutive month in February, slipping modestly by roughly 2 percent, from 450 condos sold last February to 442 in February 2015. This marks the ninth time in the past 10 months activity in the condo market has fallen from year ago levels. Nonetheless, despite the slower sales pace, last months closing total still ranks as the eighth highest February sales total on record, and is the third best over past eight years, (exceeded only by the prior two Februarys when 450 and 462 sales occurred respectively and February 2008 when 450 sales also closed.)

Of little surprise, condominium sales also fell on a month-to-month in January, declining 7.3 percent from an upwardly revised 477 condos sold in January. In spite of this traditional seasonal slowdown, demand for condos remains strong, especially among entry-level buyers look to convert from renting to home ownership, overseas investors, and suburban empty-nesters looking to downsize or relocate to Boston. Indeed, sales activity would likely be higher if not for the very limited supply of condos available for sale in eastern Massachusetts.

• The median selling price for condominiums increased on an annual basis for fourth consecutive month in February, climbing 3 percent over the past year from $390,000 last February to a new record high median price for the month of $403,568 in February 2015. This marks the twenty-third time in the last 24 months the monthly median price has risen from the same month one year earlier the lone aberration occurring in October 2014 when the median price slipped 0.6 percent from the same month one year earlier.

Meanwhile, on a month-to-month basis, the median selling price decreased 8.5 percent from a downwardly revised $441,000 in January. Since the monthly median price bottomed out at $259,500 in January 2009 during the last market correction, the median condo selling price has now risen 55.5 percent.

Like the single-family home market, the condominium market continues to be plagued by a lack of listings to meet current buyer demand, especially at the entry-level end of the market. As a result, sellers are profiting. In fact, the percentage of original list price to selling price reached or exceeded 98 percent for an thirteenth consecutive month in February, meaning the typical condo owner was able to sell their unit either at or just below the full original asking price.

• The average market time for condominiums to sell declined for a third consecutive month during February, decreasing by 4 days over the past 12 months to 76 days on the market in February 2015. However, thats up nearly two weeks from the previous month when the typical condo sold in an average of 63 days during January. Furthermore, the average time on market for condos sold now stands at its highest level in 13 months, dating back to last February when the average listing time to sale was 80 days.
• The number of condominiums placed under agreement declined on an annual basis by nearly 20 percent in February, decreasing from 756 units placed under contract in February 2014 to 598 units this February. On a month-to-month basis, pending sales did improve a modest 4.2 percent from a upwardly revised 574 units put under contract in January, but that was the second lowest monthly pending sales total of the past year, so it does not represent a huge uptick in activity.
• The number of condos on the market declined for a forty-third consecutive month in February, sliding by one-third, or 32.9 percent over the past 12 months to 1,057 condos for sale, and by 44 percent since February 2013. 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 remained persistently below 2,000 units for sale for much of the past two years. Unfortunately, it appears as though the situation is not going to improve any time soon. The number of new listings coming on the market has declined by one-third (33.7%) from last February to 615 new condos listed for sale and is also down 13 percent from January 2015 as severe winter weather prevented many homeowners from preparing their home for sale and caused others to postpone their decision to list at least temporarily.

At the current sales pace there is a 2.4 month supply of condos available for sale, which continues a steady decline from year ago levels when there was a 3.5 month supply in February 2014. 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 suburban communities where few new units are being built.