It is not new news that interest rates today are some of the highest they have been in over 20 years. To no one's surprise, that has translated to historically low inventory. From the perspective of many sellers that currently have rates of less than 4%, the idea of selling is not overly enticing. With a lack of motivated sellers, we continue to see a substantial supply and demand issue. While nationally, buyers have cooled (and they certainly have at the local level as well) Boston’s inventory shortage has been a constant for over a decade, which has left many buyers still looking and purchasing with less competition in many sectors of the market. The consistency of inventory shortage has kept Boston’s pricing fairly steady by comparison to national averages even with the substantial increase in rates.
WHAT WE ARE SEEING IN THE MARKET
With all of that said, there are pockets of the market where there are great opportunities for both sellers and buyers. We recently helped clients purchase a 3 Bed, 2.5 Bath South End Condo for5.1% below the asking price of $2,500,000 while selling their 2+ Bed, 2 Bath Condo for 11.9% above the list price of $1,350,000.
On the buy side of the situation, it was a combination of our buyer being able to secure a 6% mortgage rate and finding a listing that had been sitting on the market with owners who were motivated to sell. On the list side, it was a product of limited inventory at this price point that drove competition and sent the condo into a bidding war.
In regards to investment opportunities, we are seeing multi-families trade substantially lower than they have in years past. We recently secured a building for an investor in Boston for 30% less than the original ask price of $2,700,000. If you have been interested in adding an investment property to your portfolio, this is an ideal time to do so as list prices have come down and rents are still at historic highs.
Prime Suburb single families are still experiencing bidding wars in the $1M-$2M price point, but where we have seen homes trade for 15-20% over ask, we are now seeing many of them trade for 10% or less over ask - a substantially different market from just 5 months ago.
LOOKING AHEAD
As we head into the holiday months, homes statistically trade 5-10% less than they do in the Spring Market (March – June). If you are a cash buyer, the next two to three months may be an opportune time to purchase if we can find the right property (many of which are trading off-market). With less buyer competition, we are seeing an increase in home inspections, contingencies, and seller concessions in the form of rate buydowns. Come Spring, we anticipate pricing will continue to hold and more buyers will re-enter the market.
For sellers, the limited inventory presents an opportunity to benefit from being one of the few homes on the market in certain price points and neighborhoods. Certain segments of the market still see pent-up buyer demand.
MORAL OF THE STORY
This market is not for everyone, but there are pockets of opportunity in different neighborhoods, price points and home categories for both buyers and sellers. Sellers are offering Rate Buydowns (where sellers pay down the rate for buyers out of sale proceeds) which are landing buyers with rates in the low 4% range for the first year. Interested in learning more? Don’t hesitate to give us a call.
They pride themselves on providing their clients with the most up-to-date knowledge of the market, the utmost attention to detail, and sound advice in regards to the purchasing and selling of their homes.
