Homes are put on the market one day and under agreement the next.
That’s the rule, not the exception in the Massachusetts real estate market today, as prices soar on the few homes that are even available.
“It’s totally absurd,” said one buyer outside a local open house. He and his wife recently lost out on another home because it sold for $100,000 over the list price.
“Prices in Boston are much higher than they were last year,” said Redfin chief economist Daryl Fairweather, Ph.D. “They’re up about 10% from this time last year and competition is really stiff. Most homes sell for above asking price and homes are selling really quickly.”
Fairweather says Boston’s outer suburbs and beyond, places like Cape Cod, are seeing the biggest jumps.
For example, Redfin research shows during April, a home in Haverhill sold for 105.3% of the list price and sold in 17 days.
In Worcester, a home went for 103.8% of the asking price in 19 days.
Brockton homes fetched 102.7% of the list price in 20 days.
Boston proper is rising, but isn’t nearly as hot.
“During this whole pandemic people have been spending a lot more time at home and really started to learn that space can be valuable, and for a lot of people, they are planning on working from home even after the pandemic,” Fairweather said.
Despite this persistent rise in prices, UMass Boston economics professor Keren Horn, Ph.D., doesn’t believe this is a bubble. Horn has been looking at the types of transactions taking place.
“I really don’t think it’s driven by speculation or unreasonable expectations. I think people just want more housing and there’s not enough supply.”
In fact, listings have been down about 20% this past year. This has added more fuel to the price spiral and is pushing many homes north of seven figures.
“In some cases, yes, I think people are putting themselves in positions that are untenable,” Horn said. “But there is no evidence that people are overstretching themselves financially to get these homes and that we’ll see ourselves in a foreclosure crisis.”
Horn says an uptick in historically low mortgage rates could slow down the rise in prices. “I do think that we might see a correction.”
Fairweather agrees that we’re not in a bubble and that home price growth will slow down.
“The fact things are re-opening, people are going to want to spend their money on other things besides a home. They are going to want to go out to eat at a restaurant or go on vacation.”
But for homebuyers out there today, it still feels like hand to hand combat.
“Sellers are accepting cash offers and when you think about the prices of these houses, who has that kind of money sitting around?” asked a buyer.
Redfin told Boston 25 News that 45% of homes in Massachusetts sold within two weeks of being listed in April.
Although that sounds bad, it’s not the worst in the country. Redfin tells us the competition is even tougher in places like Austin, Texas, and Los Angeles.
Cox Media Group