The housing market continues to show steady increases in median pricing and sales volume. The S&P Corelogic Case-Shiller Index recently reported that based on June data the national housing statistics indicate that we are 10.8% above the July 2006 peak and 53.6% above the February 2012 low point. These are strong numbers demonstrating a sustained recovery and pattern of growth
Locally, Banker & Tradesman reports that statewide single-family and condominium sales volume, based on July data, increased nearly 7% from July 2017. Further, median sales prices for single-family homes increased 6.3% over the last year from $383,000 to $407,000 – the second consecutive month over $400,000. Similar trends are seen in the market for condominiums with transactions up 5.2% and median price increasing 7.2% to $385,000 when compared to July 2017.
MLS PIN reports on another interesting trend – steadily decreasing days-on-market across the state. With minor exceptions in three counties the sales price as a percentage of original asking price continues to rise. Norfolk, Suffolk and Middlesex counties continue to experience 100% or more in this category.
Statistics from the Massachusetts Association of Realtors confirms these trends, although they report the median price of a single-family home slightly higher at $420,000. The Greater Boston Board of Realtors reports that the existing inventory of homes for sale is approximately a 7 week supply (not considering new listings which may come on the market) whereas a 6 month supply has traditionally been considered a balanced market.
Clearly these are historic numbers and continue the trends of the past few years. The question many have is … can we continue at this pace? The consensus seems to be that we may be headed for a somewhat lesser trend in the 12-24 months ahead.
There are a number of indicators to keep an eye on. First, the economy continues to grow – GDP growth in the 3-3½% range will help sustain housing as long as this growth results in increased incomes and purchasing power. The tight labor market should help support continued income growth. Second, a continued strong stock market helps to sustain consumer confidence – another important indicator. Finally, the inventory of homes/condominiums is showing signs of growth. This can be a good thing as it will allow for continued growth in sales and somewhat of a damper on price increases. However, over expansion in the supply of speculative housing could result in problems as we have seen in past cycles.
Based on these statistics and with a careful eye to the economy, stock market, interest rates and inventory, I don’t see a “bubble burst” on the horizon. Time will tell.
Jonathan Avery, MAI, CRE, is president of Avery Associates, Acton, Mass.