Jan - May 2020: A graphical look at MA real estate before Phase 1 reopening

I remember the genesis of the Covid-19 pandemic - and panic - in MA with great clarity.

I mean, who would forget the great toilet paper crisis? The empty shelves void of pasta, canned foods and cleaning products; the exodus of people from supermarkets, carts full of supplies?

But most of all, I remember the darting eyes. The heightened awareness of people in the vicinity and overt effort to keep apart.

The energy in the air evidently fear.

Much of real estate translated into withdrawals and cancellations. Basically everything you could think of, from listings to showings, offers to loans and closings.

These past weeks though, have been different.

It has felt different even before Massachusetts announced the phased reopening of the economy. Clients started calling; there were more requests for private showings… and like chipmunks, my Buyers emerged from a long-drawn winter, ready to tackle the spring market.

There’s been a different energy in the air… optimism? Restlessness? De-sensitization to Covid news?

If mortgage demand is an indicator, buyers are coming back to the housing market far faster than anticipated, despite coronavirus shutdowns and job losses.

Mortgage applications to purchase a home rose 6% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

- CNBC Markets

I’ve always been a person of numbers so I turned to the MLS for an objective read of the market. Specifically, Middlesex County where I keep my pulse on the market.

This isn’t another churned monthly report of X number of houses on market and Y number of houses sold, because numbers without context means nothing. I wanted to see how the 2020 market is behaving in relation to 2019, and more importantly, I wanted a look into Sellers’ and Buyers’ behavior- are they listing and buying in earnest? Are we still in a hot market?

I therefore:

• Divided data into 4 price categories;

• pulled 2019’s numbers as a backdrop of market behavior in a regular market;

• reported data on a weekly basis to show trend;

• allocated a left graph for new weekly listings on market to show Sellers’ willingness to put their homes up for sale; and a

• right graph that shows the number of listings that got Under Agreement (it means that the Buyer had passed both stages of offer acceptance and Purchase & Sales execution).

Listings include single-family homes, multi-family homes and condos. Withdrawn and cancelled listings for both charts have been excluded to simplify data gathering and reporting, because I blame the MLS for being an unsophisticated system. 🤷🏻‍♀️

$0 - $500,000: Back to (Bidding war) business

Buyers, expect an acceleration of new listings to come on market.

Note that on the week of 11 May there were 134 new listings. The week after, on 18 May, 128 properties went Under Agreement. Market absorption rate is high.

On the week of 25 May, the number of properties that went Under Agreement is practically same as that of 2019’s.

Lesser inventory, equivalent speed of getting homes under agreement… have no doubt that we’re back to bidding wars.

$500,001 - $1,000,000: packed open houses

With the exception of a couple of weeks, this price range has the most number of new listings in any given week. Buyers, expect more listings to come, and enjoy the privilege of browsing and filling your weekends with staggered open houses.

No, this is not a case of over-supply. We’ve had housing shortage for a number of years now, so you can stop thinking about low-balling offers. Far from it; multiple listings in the same price category encourage more buyers’ activity (read: competition) because people don’t get out for one viewing - they dedicate an afternoon for five. Heard of agglomeration effect? Same thing.

Top that up with sweet ~3% interest rates and we get very eager Buyers.

Similar to the <$500,000 category, number of Under Agreement homes run close to that of New Listings’. Absorption rate is high. “Just-browsing” Buyers aren’t risking their lives; they are home watching Netflix… every group out there is a serious buyer/competitor!

With good number of viewings, Sellers, you may get aggressive on asking price.

$1,000,001 - $1,500,000: longer days on market

Note that the number of new listings is a mere 5-house difference (-7.7% y-o-y) for the week of 25 May. Across all other price categories, data for this week has Sellers’ behavior closest to that of 2019’s. Yet, Buyers’ activity has not kept up and is the most dissimilar.

My conjecture is that Buyers of this category are existing homeowners whose interest is to move into a larger home. There’s no lease coming up that would push these Buyers into making a purchase decision; no, they could well-afford to opportunistically “wait and see” as compared to the prior categories where more are looking to seize low interest rates to make their first home purchase.

Sellers in this price range should list their homes in as much of a move-in ready condition as possible. The convenience would be a motivating factor. Don’t forget good staging.

$1,500,001 and above : So they say, the mcmansions can wait.

This Seller’s graph reaffirms my 2nd market update about larger homes staying on market for a longer duration. Just look at how soft the market is in this category! 60 homes listed in the week of 25 May - DOUBLE that of 2019’s - whereas Buyers’ activity hasn’t changed.

With such a disparity, the only solution is a price decrease.

Don’t forget to come back for a follow up look at the data for weeks past 25 May! Subscribe to get notified :)