BOSTON (SHNS) – Sky-high prices and rising mortgage rates have put a bit of a chill on the Massachusetts housing market this summer, but the analysts at The Warren Group said Tuesday that the cooling of the market might be just what it needs.
There were 5,266 single-family homes sold in Massachusetts in July, a 17.4 percent slowdown from July 2021. At the same time, the median sale price shot up 8.3 percent year-over-year to $585,000 — a new all-time high for the month of July, The Warren Group reported Tuesday morning.
Year-to-date, the 29,819 single-family home sales in Massachusetts represents an 11.8 percent decrease from the first seven months of 2021 and the year-to-date median price is up 9 percent to to $553,000.
“Mortgage rates are now over five percent while a year ago they were under three percent. The single-family home median price is $45,000 higher than a year ago. Increases in wages and salaries are not keeping pace with inflation that is now running at 8.5 per cent. Plus, homebuyers face a very low inventory of homes for sale. All this leads us to a cooler real estate market,” Tim Warren, CEO of The Warren Group, said. “We’ve seen the same trend occur for many consecutive months now; prices reach new highs while the total number of sales declines on a year-over-year basis. Evidence in the cooling is seen in prices. They are rising at a slower rate, gaining just 9 percent so far this year after gaining 14 percent last year.”
Warren said he expects that low inventory, high prices, rising mortgage rates and inflation will continue to influence the market for the months to come, but said his actual outlook is not as pessimistic as his comments, which he acknowledged “sounds a bit negative.” “But I actually think that a bit of cooling off is the best thing right now. A crazy real estate market for too long is a formula for a crash, not just a cooling period of time,” he said on The Warren Group’s podcast. “Obviously the Federal Reserve is trying to ease us in for a soft landing instead of an explosive period of price gains.”
A MassInc Polling Group statewide survey of 854 likely voters earlier this month, conducted for the Responsible Development Coalition, showed that 60 percent of voters said state elected officials should put “a great deal” of priority on addressing the cost of housing. The only issue to rank higher on voters’ minds was the cost of living in Massachusetts, which 64 percent of voters said should get “a great deal” of priority from Beacon Hill.