June 2015 Greater Boston Real Estate Market Trends Report

The Single-Family Home Market:

• Sales of detached single-family homes increased on an annual basis for a first time in four months during June, improving 10 percent, from 1,683 homes sold last June to 1,853 in June 2015. Last months sales total is the second highest on record for the month of June in Greater Boston, topped only by the 1,922 single-family homes sold in June 2004. Additionally, the increase in June home sales is the largest percentage gain in home sales on an annual basis since September 2013 when sales volume climbed 22.4 percent from the previous September.

The sharp increase in home sales during June can be attributed in part to todays strong local economy, record low mortgage rates, and recent growth in new household formation. In addition, the severe weather of this past winter delayed the start of the traditional spring market, resulting in a higher than normal volume of closings during the past month.

Notably, on a month-to-month basis, home sales rose a remarkable 71 percent from an upwardly revised 1,082 home sales in May. However, for the entire second quarter, sales were down modestly from year ago levels, declining 0.8 percent, from 3,751 homes sold during the three months from April June 2014 to 3,720 in the spring quarter this year.

• The monthly median selling price for single-family homes rose on an annual basis for an ninth consecutive month in June to a new record high price for the month of June of $526,328. This reflects an increase of 3.2 percent over the previous high price set just a year ago when homes sold for a median price of $510,000 in June 2014. Similarly, during the second quarter, the median selling price rose 4.2 percent, from $480,000 between April and June 2014 to a median price of $500,000 in the comparable quarter this year. The median selling price for detached single-family homes has now increased on an annual basis in 32 of the past 33 months (dating back to September 2012).

Notably, on a month-to-month basis, the median selling price of single family homes improved even more sharply, increasing 9.7 percent from a median price of $480,000 in May, as the number of homes valued at $1 million or more jumped 87 percent over the prior month, from 163 in May to 305 in June.

The steady uptick in median selling prices reflects todays tight inventory levels, improved optimism about the economy and housing market, and pent-up demand from millennials looking to transition from renters to homeowners, as well as empty-nesters looking to downsize and cash in on strong gains in their homes value in recent years. These conditions are benefitting sellers, as the ratio of original list price to sales price increased steadily over the previous month and year ago levels to 99.3 percent in June, its highest level this century and the twenty-eighth 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 June, the median price is up 70 percent from March 2009 when home values bottomed out at $309,950.

• After declining for 28 consecutive months from March 2012 June 2014, the average market time for homes sold has now increased for 12 consecutive months on an annual basis in Greater Boston. Single-family homes sold in June 2015 were on the market an average of 60 days, or one day longer than last June. However, on a month-to-month basis, listing time declined sharply by one and one-half weeks (11 days) from May when the typical home sold was on the market for an average of 71 days before an offer was accepted.
• Pending home sales set a new record for a single month during June climbing 28.8 percent, or nearly 440 units, from the same month last year to 1,952 homes placed under contract. This eclipses the previous monthly record high set one month earlier, when 1,819 homes were put under agreement in May 2015. Its the third consecutive month and fourth time in the first six months of 2015 that pending sales have risen on an annual basis. Pending sales also improved on a month-to-month basis in June climbng 7.3 percent from a downwardly revised 1,819 homes put under contract in April.
• The inventory of single-family homs for sale continues to trail historic norms, declining on n annual basis by 14 percent, or 600 properties, compared to the same month last year. With 3,624 homes listed for sale as of June 30, the supply of homes on the market is at its lowest level in more than a dozen years.

Meanwhile, on a month-to-month basis, the supply level was essentially flat, declining 1.4 percent from an upwardly revised 3,675 single-family properties in May. In addition, the number of new listings coming onto the market fell 8 percent, or more than 200 units, from the previous month, but did increase nearly 19 percent (or roughly 375 units) from June 2014. Unfortunately, this modest gain will do little to improve market conditions given the current buyer demand, especially since permitting for new homes remains well below historic norms and many 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 last month to 2.0 months from 2.5 months of supply in June 2014 and 3.4 months of supply during May. In a balanced market 7.5 8.5 months of supply exists, so at the current sales pace there remains an insufficient supply of homes available to meet buyer demand.

The Condominium Market:

• Sales of condominiums increased on an annual basis for the first time in eight months in June, climbing nearly 7 percent over the past 12 months from 1,269 condos sold last June to 1,356 in June 2015. Historically, last months sales total is highest in eight years and the fourth best on record for the month, surpassed only by June 2005 (1,548 condos sold), June 2007 (1,399 units sold) and June 2004 (1,381 units sold).

On a month-to-month basis, condo sales jumped, increasing 43.8 percent from an upwardly revised 943 condos sold in May, but for the second quarter sales did slip 5.1 percent, from 3,135 in the three months from April June 2014 to 2,975 in the spring quarter this year. Nonetheless, demand for condos remains strong, especially among entry-level buyers looking 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 an eighth consecutive month in June, rising 4.5 percent over the past year from $439,900 in June 2014 to a new all-time high monthly median price of $459,900. That tops the previous record high median price for any given month set one month earlier in May when the median price was $455,100. This marks the twenty-seventh time in the last 28 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.

On a quarterly basis, the median selling price appreciated a steady 7.4 percent, increasing from $420,000 in the second quarter last year to a median price of $451,000 in the three months from April June 2015. Since the monthly median price bottomed out at $259,500 in January 2009 during the last market correction, the median condo selling price has climbed 77 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 climbed to a new record high of 101.6 percent in June, making it the third consecutive month the ratio of list price to sale price has stood at or above 100 percent meaning the typical condo owner was able to sell their unit either at or above the full original asking price.

• The average market time for condominiums to sell decreased on an annual basis for a fifth time in the last six months in June. The typical condo sold in June was listed for 42 days before an offer was accepted, which is lowest average days on market until sale this year, and down four days both from last June and the previous month when the average days on market was 46 days.
• The number of condominiums placed under agreement rose for a fourth consecutive month in June, increasing 25 percent, or roughly 285 units, over the past 12 months to 1,429 condos placed under contract this June. In addition, on a month-to-month basis, pending sales improved 9.4 percent from a downwardly revised 1,306 units put under contract in May. The number of condos put under agreement in June 2015 is the most of any month in over 10 years, dating back to May 2005 when 1,486 condos went under agreement, thus illustrating the strong demand for condominiums in the Greater Boston market.
• The number of condos on the market decreased for a forty-seventh consecutive month in June, declining 17.2 percent over the past 12 months to approximately just under 1,660 condos for sale, and by more than one-quarter (26.7%) since June 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. At the current sales pace there is a 1.2 month supply of condos available for sale, which is down steadily from a 1.6 month supply in May 2014 and 1.9 month supply in Mayl 2015. As a result, 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.