It was the best of times, it was the worst of times…”
While Dickens didn’t exactly have real estate in mind when he wrote this line, it’s still a good description of the real estate market’s ups and downs in 2018. The first half of 2018 in metro Boston, where I work, was a great time to be a seller’s agent. Low inventory and energized buyers were engaging in bidding wars and all but the most run-down properties were under agreement in a matter of days. Waived inspection and appraisal contingencies were the norm. It was easy to rest on your laurels as your listings sold way above asking and your clients were incredibly grateful to you for getting them more than they had dreamed possible for their homes.
On the other hand, working with buyers posed significantly more challenges during that time period. The lack of inventory from 2016 and 2017 continued during the first half of this year, with many well-qualified and motivated buyers losing out on multiple homes before finally getting an offer accepted. Some buyers quit looking altogether. Those that didn’t were often actively looking for months at a time, exhausting both themselves and their agents. Asking prices were often seen as the starting point of an auction. Buyers got extremely frustrated about homes selling far above asking price. Offers as high as 10 percent over asking price barely got a glance.
What Goes Up Must Come Down
It is still a seller’s market in metro Boston, but as both interest rates and inventory have risen significantly, prices have either stabilized or fallen. In the community of Melrose, a small city just seven miles north of Boston, current single-family inventory is up 275 percent since April and 73 percent just since the end of August. Homes that would have immediately sold way over asking price are no longer eliciting bidding wars and often not selling immediately. Sellers have been listing their homes at levels where their neighbors recently sold, only to find that the market has changed. Now, a lower price point often drives both activity and offers on a home. This change assisted buyers just entering the market and those who had been losing out on home after home in the spring. It has also led to many newer realtors and agents having their first price-change discussions with clients ever if they have only been in real estate a few years. Paradoxically, a lot of buyers have also become a lot more cautious, afraid that the price changes they are seeing are going to lead to a market crash. The scarcity mindset that characterized early 2018 is over. Buyers are being a lot pickier than they were before.
Don’t Worry: You Didn’t Miss Your Chance
For anyone who has been thinking of buying or selling real estate in 2019: Don’t despair. It remains to be seen what will happen in 2019, but, as I often tell buyers feeling concern over a home purchase, as long as you are planning to stay in an area and are buying a home that works for your long-term strategy, be it homeownership or investment, you should focus on when it is the right time for you to buy – and very little else.
What am I telling my sellers? Well, it is still a seller’s market in my community. Well-priced homes still receive lots of attention from buyers, and bidding wars still happen even if they are not the norm anymore. A calmer market will make it easier for sellers who need to sell before buying a new home as well, something that was very challenging to do in 2018 without renting in between. Inventory is still historically low. The overall trends I saw in 2016 and 2017 continue, with more buyers being focused on quality of life and shorter commutes, so most of the local markets I focus on are still in high demand because of both proximity to public transit and Boston itself.
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