Middlesex County Massachusetts Market Update | March 2023

 

What is happening in the housing market and what can you expect if you’re thinking about buying or selling a house this year?  The headlines seem scary, but here is a breakdown of what we are seeing in our local market.

Click below to watch the video!

 

 

Interest Rates:

 

Rapidly rising interest rates, which more than doubled by the end of 2022, created instability and rocked the housing market.  As a result we saw fewer buyers in the real estate market because many either no longer qualified for a loan or were forced to lower their budget.  

 

February 2023 started off with rates hovering around 6%, but by the third week in February rates were up nearly three quarters of a point to about 6.75%.  On a $650k mortgage that’s a difference of over $300 a month!

 

 

Right now, in real estate, we are seeing activity pick up when rates are closer to 6% and slow down when they inch towards 7%, so we are keeping our fingers crossed that rates don’t creep too high!  But, the Feds are signaling that they plan to continue to raise rates to try to tamper inflation, so anything can happen.  We will keep watching.

 

How long are homes taking to sell?

 

The year to date numbers show that homes were on the market for an average of 23 days before accepting an offer in 2022.  This year, in 2023, it’s taking an average of 33 days. So, while homes are taking longer to sell, 33 days is still really fast and is considered to be a seller’s market.  

 

 

Are prices dropping?

 

Even though rates are up and homes are taking longer to sell, sales prices have still gone up by a few percentage points when compared to last year. That’s a much more normal pace than the double digit increases we saw during the pandemic years. I suspect that as we head towards the spring market and compare prices against last year’s peak we will see a bit of a price correction in the year over year numbers, but nothing drastic. 

 

Will more houses come on the market?

 

Although inventory is up (526 homes on the market on 2/23/23 versus 303 the year before), it’s still not close to the number of homes we had on the market in the pre-pandemic years (873 in 2020).  So, while there are more homes on the market we still don’t really have enough, which is why prices have been staying strong.

 

 

DATA GATHERED FROM MLS PIN ON 2/23/23

 

In addition we are also seeing a “locked-in” effect that’s keeping inventory low and preventing many would-be home sellers from listing their property.  Almost 90% of homes with a mortgage in Massachusetts have an interest rate below 5%, which means that in order to move that homeowner is facing both a higher purchase price and a higher interest rate.  For many, the cost of moving out of their low locked-in payment just isn’t feasible and they are stuck in their homes.



What are buyers doing?

 

If you are a home buyer you might want to consider loan products like an Adjustable Rate Mortgage, rate buydowns (either temporary or permanent), or first time home buyer programs like the AMI 120.  Creative use of financing options and/ or closing costs credits can help make your home purchase more affordable.