December hasn’t seen an inventory of homes for sale this low in sixteen years. As of December 14th, 2016, there were just 15,578 homes on the market in Massachusetts, a decrease of 22% compared to the same period last year when there were 19,859 homes on the market.
What does this mean?
This means that over the last 16 years every December has had a higher inventory of houses on the market than this month. Week to week in 2016, inventory of homes for sale has tracked an average of 12% lower than the same weeks in 2015. Below is a line graph that illustrates the comparison of the two years. In the earlier months of 2016, inventory was very similar to 2015. In the beginning of May (week 16 on the graph), the gap widened and continued that trend for the rest of the year which brings us to now where it is lower than it has been since the late nineties!
How does this happen?
The percentage of homes listed each week immediately going under agreement has increased. In 2015, just under 9% of the homes that were listed for sale were selling each week. This year, we’ve seen that number rise to an average of just under 11%. So homes are being eaten up quickly. It’s the ‘Pac Man Effect’ Anthony discussed 6 months ago in his Market Report. In addition, in 2016 there were 32 weeks where the number of properties that went under agreement exceeded the number of properties that were listed, compared to only 23 in 2015. It is in this sort of market that we start to see prices increasing across the board (as buyers have to compete more and more for limited inventory) and the frequency of bidding wars increase which is exactly what will begin to happen after the first of the year and into spring of 2017.
How does this affect Sellers?
We always say that Listing in the Winter makes sellers the most money. The lower the inventory, the more lucrative it is for sellers. Buyers have less of a pool of homes to choose from, so the demand for the limited amount of homes available goes up. So, this current market status is terrific news for current sellers and those considering listing after the first of the year. Start prepping now if this pertains to you!
What if you are a Buyer?
This is notoriously a time for the inventory to be lower than the rest of the year, which can be difficult for buyers who have specific requirements for the home they’re trying to find. Homes tend to go quickly in the winter – sometimes before they’re even listed. If you are in the position to purchase a home in the next month or so, you must be prepared so that you can jump on a home as soon as you are sure you want to make an offer. Your first step is to hire an agent who can assist you so that you are ahead of competing buyers and obtain mortgage preapproval if this applies to you. Agents will be able to get you ahead of the game, coach you through bidding wars and streamline this sometimes tumultuous process when it’s this competitive. Some agents may even be able to gain access to homes before they’re even officially on the market – so make sure hire a good one. We know a few!