The Massachusetts housing market is cooling. The trend of rising prices and declining sales have persisted for several months. According to a new report, the Massachusetts real estate market is exhibiting symptoms of cooling after two years of record-setting activity. The Massachusetts Association of REALTORS® (MAR) has released its housing statistics for July 2022.
While inventory has been an issue we’ve Massachusetts is seeing a positive change in that area as housing stock continues to climb. In July, high prices, low availability, and rising mortgage rates slowed down home sales, perhaps signaling the beginning of a long-awaited return to normalcy.
In July 2022, closed sales of single-family homes and condominiums decreased statewide. The median price of single-family homes increased from the previous year to $607,000. The median price of condominiums increased from this time last year to $530,000. The number of single-family homes and condominiums for sale in July was at its lowest level since MAR began collecting the statistics in 2004.
New Listings were down 11.5 percent for single-family homes and 18.1 percent for condominium properties. Closed Sales decreased by 16.2 percent for single-family homes and 26.7 percent for condominium properties. The Median Sales Price was up 8.5 percent to $607,000 for single-family homes and 10.4 percent to $530,000 for condominium properties. Months Supply of Inventory remained flat for single-family units but decreased by 16.7 percent for condominium units.
MAR data provided the following key housing indicators for July 2022:
The median sales price for single-family homes increased by 8.5% to $607,000.
The median sales price for condominiums rose by 10.4% to $530,000 when compared to the same time period last year.
New listings for single-family homes decreased by 11.5% and 18.1% for condominiums, both compared to the same period last year.
Compared to July 2021, closed sales decreased by 16.2% for single-family homes, and 26.7% for condominiums.
Massachusetts Housing Market Forecast
Massachusetts home prices continue to rise as more buyers compete for the same properties. Since the last decade (Sept 2012), the typical home value in Massachusetts (statewide) has appreciated by nearly 92% (Zillow Home Value Index). Currently, the typical value of homes in Massachusetts is $591,277. Massachusetts home values have gone up by 12.9% over the last twelve months and 33.5% over the last two years.
All-Transactions House Price Index for Massachusetts (Quarterly)
Q2 2022: 1,106.37
Q1 2022: 1,036.38
Q4 2021: 1,010.57
Q3 2021: 987.87
Q2 2021: 938.97
Source: FRED
A decline in pending sales in July means the closed sales will also drop in the coming months. Because a home goes under contract a month or two before it is sold, the pending home sales generally lead to closed sales by a month or two. The trend of prices surging and sales falling will continue in the coming months.
The Months Supply of single-family homes in Massachusetts is 1.4, which is tilted towards the seller side. When the demand for housing is high, but supply is low, home prices often rise. It is said that five or six months of supply is associated with moderate home price appreciation. Anything lower means a sellers’ market.
Pending Sales Report by Region – Single-Family Homes – July 2022 – YoY
Pending Sales declined in Cape Cod & Islands by 2.5%.
Pending Sales rose in Central by 3.0%.
Pending Sales declined in Greater Boston by 9.3%.
Pending Sales declined in the Northeast by 5.5%.
Pending Sales declined in Southeast by 4%.
Pending Sales declined in the South Shore by 8.9%.
Pending Sales declined in the West by 1.3%.
Here’s Zillow’s forecast for some of the metro areas in Massachusetts. None of the MSAs of Massachusetts is predicted to see a home price decline in 2023.
Boston, MA home values are forecasted to rise 0.8% between July 2022 to July 2023.
Worcester, MA home values are forecasted to rise 1.3% between July 2022 to July 2023.
Springfield, MA home values are forecasted to rise 1.5% between July 2022 to July 2023.
Barnstable Town, MA home values are forecasted to rise 5.4% between July 2022 to July 2023.
Pittsfield, MA home values are forecasted to rise 3.0% between July 2022 to July 2023.
Greenfield Town, MA home values are forecasted to rise 2.7% between July 2022 to July 2023.
Vineyard Haven, MA home values are forecasted to rise 1.6% between July 2022 to July 2023.
Indicators That Can Impact The Housing Market in Massachusetts
Massachusetts is the best state to live in, according to a new report. WalletHub compared all 50 states based on affordability, the economy, education and health, quality of life, and safety. Massachusetts ranked first overall with high scores for the economy, education, health, quality of life and safety. However, it ranked 44th for affordability.
After a sharp drop in recession in the spring of 2020, Massachusetts has seen a quick recovery. Local unemployment rates dropped in nine labor areas, increased in five, and remained unchanged in ten labor market areas in the state during the month of July compared to June, the Executive Office of Labor and Workforce Development reported. Compared to July 2021, the rates were down in twenty-four labor market areas.
The Bureau of Labor Statistics estimates the statewide unadjusted unemployment rate for July 2022 was 3.5 percent, down two-tenths of a percentage point from the June 2022 estimate of 3.7 percent. The statewide seasonally adjusted preliminary jobs estimate showed an increase of 13,500 jobs in July and an over-the-year gain of 134,500 jobs.
But the amount of goods and services workers are producing is slightly decreasing. In Massachusetts, real GDP fell by 0.2% in the second quarter, a bit less than the 0.9% drop nationally. Wages and salaries are up 6% compared to last year’s second quarter. But that has not been enough to keep up with rising prices. Nationally, prices are 9.1% higher than they were last year.
The leading industries in Massachusetts include biotechnology, maritime trade, engineering, information technology, finance, tourism, as well as higher education. Massachusetts’s population grew 7.4% to Over 7 million From 2010 to 2020. his growth also represents the fastest percentage growth the state has experienced since the 1960s when the resident population increased by 10.5% between 1960 and 1970 Housing units were up 6.7% and vacancies were down to 9.7%.
Sources:
https://fred.stlouisfed.org/series/MASTHPI#
https://wallethub.com/edu/best-states-to-live-in/62617
https://www.census.gov/library/stories/state-by-state/massachusetts-population-change-between-census-decade.html
The post Massachusetts Housing Market: Prices, Trends, Forecast 2022-2023 appeared first on Norada Real Estate Investments.