Massachusetts Home Buyer Guide

Massachusetts home buyers know – some all too well – that real estate inventory in the Bay State in 2013 was very low, making it difficult for even those willing to pay top dollar to land a home. It was an especially difficult market for first-time home buyers, who had to compete with many cash-strong investors and move-up buyers. 

Will Massachusetts home buyers face a less frenzied real estate market in 2014? Maybe. 

Historically low mortgage interest rates earlier in 2013 and home prices still near the lows of the real estate crash made buying a home more affordable than it had been in a long time. Throughout the spring and summer, it was common for decent homes for sale at reasonable prices in the Greater Boston Area to have multiple offers in just a few days after hitting the market. Some home buyers were even agreeing to waive important contingencies, such as home inspections (a huge mistake by the way). 

Another factor often ignored in stories written about increasing home sales, rising prices and low inventory in 2013 is that 2012 was a good year that saw home sales increase to numbers not seen in years. The Warren Group reported 2012 single-family home sales increased 18 percent compared to 2011, and condominium sales increased 25 percent. Single-family home sales in 2012 were the best since 2006, The Warren Group reported, and it was the best year since 2008 for condo sales.

Massachusetts home buyers quietly cleared out the excess inventory in 2012, putting in place a supply and demand imbalance in favor of home sellers in 2013. The Massachusetts Association of Realtors reported that the average monthly inventory of single-family homes declined 14 percent in 2012 while the average monthly inventory of condominiums dropped 27 percent. 

An additional factor was the decline in foreclosures in 2013. The Warren Group reported that through the first nine months of 2013 foreclosure deeds – the final step in the Massachusetts foreclosure process – declined 63 percent. Foreclosure petitions – the first step in the Massachusetts foreclosure process – declined 70 percent. 

The inventory of single-family homes as of November 30, 2013 decreased 20.6 percent from November 2012 (18,428 listings in 2013 from 23,213 listings in 2012), the Massachusetts Association of Realtors (MAR) reported December 30, 2013. The number of single-family listings translates into 4.3 months of supply in November 2013, down from 5.9 months of supply in November 2012 and down from 5.2 months in October 2013. November marked the 21st straight month of single-family inventory decreases in Massachusetts.

The inventory picture may be improving in the coming months for Massachusetts home buyers.

The number of new listings added to the market of single-family homes in November increased 7.9 percent over the same time last year (3,954 new listings in 2013 from 3,663 in 2012), MAR reported. The number of new listings added to the market in October increased 10.9 percent compared to October 2012. (5,975 new listings in 2013 from 5,387 in 2012)

The inventory of condominiums on the market declined 27.7 percent in November compared to November 2012 (4,925 listings in 2013 from 6,813 listings in 2012). The number of condo listings translates into just 2.8 months of supply, down from 4.4 months in November 2012 and down from 3.5 months in October 2013.

The number of new listings added to the condominium market in November increased 3.5 percent from November 2012 (1,375 new listings in 2013 from 1,328 listings in 2012). The number of new condo listings added to the market in October increased 17.7 percent from October 2012 (2,153 new listings in 2013 from 1,829 listings in 2012).

With the number of listings on the rise, Massachusetts home buyers may have more homes to choose from in the coming months. Increased inventory also may slow the rise in home prices. Both scenarios would be good news for home buyers, especially first-time home buyers.