Sales up 9% and Prices up 3.6%
The Massachusetts housing market experienced robust growth in 2015. It was by far the biggest year for home sales in 9 years. There were a total of 83,961 homes sold in Massachusetts in 2015, which is a 9% increase over 2014 when there was 76,494 homes sold. The last time we saw greater sales in a given year was in 2006 with 88,820 homes sold across Massachusetts. This noteworthy increase in home sales is a result of several contributing factors such as; mortgage guidelines loosening throughout the year, interest rates remained low which continued to give buyers more purchasing power, home equity increased giving sellers more flexibility to sell, and the overall local economy was strong. There is no longer any doubt that the housing recovery is in high gear. Below is a graph that illustrates home sales per year since 2005.
2015 Sales by Month
2015 got off to a slow start; January home sales were down following a Slow Fall Market in 2014 combined with record breaking snow fall which delayed the start to the year with home sales down in March, April and May. Once the snow finally melted home sales were up every month for the remainder of the year. Below is a graph that illustrates home sales per month in 2014 as compared to 2015.
The average sale price of all three home types (Single, Multi-Family, Condominiums) in 2015 was $381,841 which is 3.6% higher than the 2014 average of $368,542. The average price for a single family home in Massachusetts was $419,918. Condominiums sold for an average of $306,281 and Multi-Family homes sold for an average of $409,921.
Home Prices per County
The majority of the counties in Massachusetts had another strong year for home price growth.
Inventory of Homes for Sale
The year began with the Lowest Inventory levels in 11 years. Then it was the first March since 2003 that inventory was lower than January totals which occurred due to the record snow fall that we experienced in February. From that point on inventory seemed to stay on average about 5-10% lower than it was in 2014 for the rest of the year.
Homes Listed for Sale
As you can see above, inventory of homes for sale almost always remained below 2014 levels throughout the year. This was not due to fewer homes being listed for sale. In fact, there were more homes listed (In MLSPIN) for sale in 2015 at 110,063 compared to 105,199 in 2014. That represents almost a 5% increase in inventory. This is contrary to how many people feel. Many real estate brokers have even been saying, “We need more inventory” and this is true but it is not as if homes are not being listed. Homes were being listed but for most of the year they were selling as fast as they were being listed. The chart below illustrates the number of homes listed per month over the last two years.
Pending Home Sales (contracts accepted)
Pending sales increased so much that it kept inventory lower than 2014 for the entire year. The total amount of pending sales in MLSPIN in 2015 was 97,943 compared to 89,406 in 2014 which represents a 9.5% increase. The increase of 5% of homes listed and pending sales increasing almost 10%, combined with the excessively low inventory throughout the winter, resulted in low inventory levels throughout the year. The chart below illustrates pending properties per month for the last two years.
2016 is off to a better start than in 2015. It is very likely that January home sales will exceed January 2015. Both homes listed for sale and pending home sales are higher year to date compared to January 25th 2015. This is certainly a bright sign of what is to come in the months ahead. There were many very positive Mortgage Guideline changes in 2015 that aided the housing market and will help even more in 2016. There are also additional mortgage changes that are being considered such as updating credit models and loosening of condominium purchase guidelines to bring more buyers into the market. Although inventory of homes for sale is low right now, we do expect it to rise earlier than it has in years past and certainly earlier than it did last year during all the snow. The reason we expect the inventory of homes to rise earlier is in part related to a recent MLS guideline change that reduced the number of days a home has to be off the market from 60 days to relist as new as opposed to 90 days. This will cause more sellers who failed to sell their homes this past fall to relist sooner. As long as we don’t experience another February full of blizzards all of this will start the year off sooner and likely leave sales ahead of 2015 for the remainder of the year. If inventory remains low, we do fully expect Bidding Wars on homes that are priced correctly in the months to come as we have seen in the late winter and early spring for the last three years.
Last year we predicted that 2015 would be the biggest year for home sales since 2005. We listed 9 Reasons why, however, 2015 resulted in approximately 4,859 sales short of what we anticipated. We are predicting that 2016 will exceed 2006 and sales and home values will increase at least 5% over 2015. We anticipate that 2016 will be a great year with continued market strength.