Middlesex County Q1 Market Report

April 19, 2023, By:  Susan Kadilak

If you’ve been house hunting then you know that the real estate market in the Greater Boston area has been a white hot sellers market for the past few years and we’ve been seeing double digit annual appreciation increases in some cities and towns. The doubling of interest rates in 2022 led to some serious market adjustments and slow downs in price increases that are still continuing to make an impact now in 2023.

Click below to watch the video!

 

Interest Rates Ride a Wave During Q1:

 

In 2022, the interest rates nearly doubled, hitting a high of around 7% in the fall. The fast pace of rising rates knocked many buyers out of the market completely because they could no longer afford to buy a home with the new rates. During Q1 of this year we saw rates come down and then go up again, and then repeat. In February 2023 the interest rates started off just below 6%, but by the end of the month they were close to 7% which is a big swing in a short period of time.  In the marketplace we are seeing things slow down when the rates go closer to 7%, so we’re keeping our fingers crossed that the rates stay around 6% (or lower!).

There Are More Homes on the Market, but Inventory is Still Low

The number of single family homes for sale in Middlesex County on 3/31/23 was 683, compared to 512 last year. However, that number was 1044 in 2020, so even though there are more homes on the market we are nowhere close to pre-pandemic inventory levels. Overall, the number of homes sold is also down (1241 homes sold in Middlesex County in Q1 2023 versus 1624 last year).  

 

Even with all of these changes, we are still very much in a seller’s market because we simply don’t have enough homes for sale. In Q1 2022, 67% of the homes listed were sold and this year that ratio is 64%. So even though overall volume is down, the supply and demand balance is nearly identical to last year. This is why the market is still very competitive for home buyers and sellers are still able to sell at a premium.

Homes are taking longer to sell

In Q1 of this year we saw the amount of time it takes for a home seller to accept an offer increase from 21 days to 33 days.  Home price increases are also slowing down with a 2% year over year increase, compared to a whopping 12% for the previous year.

When will more houses come on the market?

Many homeowners are hesitant to sell right now because they are “locked in” to low interest rates. Almost 90% of homes with a mortgage in Massachusetts have a rate that is below what’s currently available, so moving into a new home would be much more expensive. If rates come down we may see more homes for sale, but that will also bring more buyers so it’s hard to tell whether or not this would really change the competitive environment home buyers are experiencing.

 

Will We See A Buyer’s Market?

Right now all indicators are looking like we will remain in a seller’s market for some time unless something drastically changes. Here in Massachusetts we simply don’t have enough homes for sale compared to the number of people who need them. Nationwide, the baby boomer generation is estimated to be 68.7 million in size, however the Millenials, who make up a large portion of current home buyers, are 82.2 million strong with Gen Z coming in right behind them at 86.4 million, so we have this huge demand in the marketplace while home builders are still not back to producing housing at pre-Great Recession levels. Affordability and supply will continue to be issues and I’ll keep watching and sharing what I see.

 

Susan Kadilak is a licensed real estate agent based in Burlington, MA. She prides herself in providing the best home buying and home selling services to her clients and has over 20 years experience in the real estate industry