What is the number 1 question both buyers and sellers are asking right now? I bet you know what it is...
With Covid-19 running rampant, work stoppage and skyrocketing unemployment, and with mortgage lending getting tighter and tighter everyone wants to know what is going to happen to the real estate market. But what they are really asking is what will happen to the price of homes.
I wish I could answer that question, but I can tell you that based on the amount of available inventory I would say that I don't believe it will go down, at least not in any significant way. Take a look at this chart of Inventory of Single Family Homes in Bristol County spanning the last 5 years:
Notice the number of listing units. One of the biggest issues we have had over the last few years is lack of inventory. Now look at the inventory level for 2020. It is down 25% from this time last year and down 45% from 5 years ago.
Now look at the months of supply. A stable market, a market in balance (equal number of buyers and sellers) is usually indicated when there is a 6 month supply of homes available. We are currently at 1.7 months of supply.
Now, let's take a look at this chart for Multi-Family homes in Bristol County:
See a trend here? Very similar statistics as the single family chart. Now let's look at condominiums:
Again, similar story.
There is no doubt that the effects of the corona virus will have a chilling effect on the economy and the number of home buyers in the market place but with so little inventory the likelihood of any long term and significant downward pressure on pricing is low.
However, if there is one constant in real estate it's change! I do expect that once we are on the other side of this, and businesses are able to re-open and we all start to become more accustom to this new normal that there will be a flood of homes hitting the market. So when that happens we will have to see how the market responds.
EZ Home Search Real Estate
MAR (Massachusetts Association of Realtors) Releases August 2019 Pending Sales Data Report
Pending Single Family and Condominium Home Sales were UP in August of 2019 when compared to August 2018.
This new data marks the 12th straight month of year over year increases for single family homes adding more pressure to an already tight inventory market. Single family prices also saw a 2.8% year over year increase.
The condominium data showed similar gains with pending sales either flat or up 9 of the last 12 months and a year over year price increase of 3.1%.
These continues gains are bringing home affordability down causing many potential buyers to continue to be only potential buyers.
Pending home sales are considered a leading indicator of future existing home sales and is generally considered a more accurate measure of the strength of the real estate market. This is believed because a majority of the labor involved in selling a home are performed that lead up to signing an agreement for the sale of a house. The mortgage process represents the end of the sales cycle but is a technicality and can take 4 - 8 weeks on average. Generally pending home sales is an accurate measure of existing home sales one to two months in the future.
Check out the full Press Release here.
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