2023 Massachusetts Real Estate Market Recap
The 2023 Massachusetts Market Recap
The 2023 chapter has come to an end. It’s hard to believe… But what a year. I have to say… That was the best real estate crash I have ever seen.
All the so-called experts said 2023 was going to be the year that the real estate market was going to crash. It didn’t happen, so now they have extended their prediction into 2024! Which I can tell you with all certainty won’t happen.
But let’s get into it all. What happened in the 2023 Massachusetts Real Estate Market. And what does it all mean for 2024 in the Single Family, Condo and Multi-Family Real Estate markets?
Real quick, my name is Jeff Chubb and I am a recovering Investment banker, turned real estate agent that has sold more than a 1,000 homes. If you are planning on buying or selling a home now or in the future, then it would be a pleasure to speak with you.
Let’s start with Single Families
We saw 36,248 Single Family homes sell in Massachusetts for an average sales price of $756 thousand dollars.
It wasn’t a pretty year when you look at it from the sales perspective, but the market performed better than my prediction of 3% at this time last year.
Yes, I was wrong with my prediction. I said the market was going to go up a max of 3% in 2022. I own that. But I will also point out that I was closer to being right then all of the market crashing crowd.
Let’s start out with the sales. There wasn’t one month in 2023 that we exceeded the sales levels that we saw in 2022. Actually the closest year over year numbers we saw were in November where sales were off 9.2%.
The 36,248 units sold was 21% less than what we sold in 2022 when we sold 45,919 Single Family houses.
There is no doubt that a housing recession happened in 2023. The housing recession just wasn’t in regards to pricing. The recession was in the amount of sales. And this year provided us with the best proof that sales levels and housing prices are not correlated.
We saw this phenomena play out all year. Sales were down and then down some more as pricing continued to go up. And that’s because it’s inventory levels and pricing that is correlated.
The year over year pricing data was a pretty great thing for homeowners throughout the Bay State. I bring up this graph first because I wanted to point out the pricing trend since June. For the last 7 months of 2023, the trend for housing pricing gains was going up.
And when you look at the longer-term picture, it really gives you a better idea as to what’s happened and most likely is going to happen as we move forward into 2024.
It looks like May of 2023 is going to be our low point. We had sales level gains trending down for pretty much of all 2022 as the rate shock was being absorbed by the housing market.
Again, the important part is that this is the trend that we will start with as we begin 2024. This is not what you want to see if you are one of the people praying for housing prices to go down.
And here is the look at year over year housing prices in Massachusetts since 2007. When you look at the long term view of housing prices, then you really begin to realize how the 2023 price gain of 4.8% is extremely respectable.
And by the way. This is what we want. The 15% yearly gains are not sustainable. We need more years of this sustainable growth to allow the broader economy and wages to catch up… But personally, I don’t necessarily see that happening.
Let’s continue to dig into this data and look at the yearly sales comparison.
Again, it wasn’t pretty. But the 36 thousand units was not our worst year of my lifetime. Heck, it wasn’t even the worst year of my nieces or nephews' lifetimes. The sales levels in 2023 ended up beating out the sales levels that we saw in 2010 as well as 2011.
This was a resilient market. But here is my worry as we start writing the 2024 chapter… There is a good amount of pent up demand out there. People waited on the sidelines because they were hopeful that home prices were going to go down. They waited on the sidelines, hopeful that mortgage rates would go down…
And we are already seeing a little surge of buyer activity now that mortgage rates have started to go down. And the FED has indicated that they are going down some more. It’s a recipe for a brutal Buyer’s Market in 2024.
Here is another prediction I was wrong about. I really thought we would see some year over year sales level increases towards the end of this year. We didn’t. We have now had 30 consecutive months of year over year sales declines.
We are closing in on 3 years of sales declines month after month. This cycle breaks in 2024.
As we said earlier. It’s prices and inventory levels that are correlated. And inventory levels remain stubbornly low.
We ended the year with over 6 times fewer homes on the market then we did in 2011. To visually put this in perspective, as you drive around… Imagine for every one for sale sign you see, then you would also see three more sale signs on each side of that house.
That’s how low inventory is right now and has been for essentially the last 4 years. And that is not going to change for 2024. There is no inventory relief coming. Foreclosures are still below pre-pandemic levels. Builders aren’t building enough supply to keep up with demand… And even if they were willing, there isn’t exactly a ton of land laying around on the Eastern side of the state… And that’s before even beginning to discuss all the red tape!
Yes, these low inventory levels are going to continue. They may go up a little here and there, but nothing that would be substantial to cause prices to go down.
Just what we predicted. Inventory levels ended the year pretty much right between the levels of 2021 and 2022.
Inventory will remain low until around the end of February. At that point we will start to see our yearly Spring Inventory build. As you can very well see, the inventory flows are a predictable trend.
Why is this so important? Well you can see where we are starting in 2024. It’s the little blue dot to the left of the chart. It’s true we are not starting the year with the lowest inventory levels in history. We are starting the year with the second lowest inventory levels in history.
Now add in pent up demand plus a lowering rate environment and well… Get ready. If you are a seller, then get ready to pop the champagne. If you are a buyer, then you may need to schedule a couple more sessions with your therapist…
But as of the beginning of 2024, we have 367 fewer homes than the beginning of 2023 and 740 more than in the beginning of 2022.
Real quick so we can see how the year ended and see that the magical trend held true… Except for the October outlier month that is.
But what to expect in 2024 is pricing levels to ramp up through the Spring Months and peak in June with the average price pulling back in the Fall months of 2024.
We have the condo market and the Multi-Family market up next…But first, any chance you can do me a huge favor as it helps play with the youtube algorithm? Can you hit that like button? It just makes a huge difference to me as well as my channel. And click here if you want to take a look at all Quincy Homes For Sale .
We saw 16,583 Condos sell in Massachusetts for 2023 with an average sales price of $687 thousand dollars.
It was a great year in the Condo market. It performed better than the Single Family Market actually.
Let’s start with the sales data...
Our sales levels ended up being off the sales levels of 2022 by 11.5%. And this graph really helps illustrate why this number was lower than the Single Family data. We really closed the gap towards the end of the year.
But like the SIngle Family market, there was not one month where we sold more houses than the year prior. The closest we ever got was in October of 2023 when we sold 5.2% fewer houses then in October of 2022.
It really wasn’t an awful year in the sales world for Condos. It wasn’t a Hallmark year either, but respectable.
Our sales levels were slightly below the levels we saw in 2012 and a pretty good leap above the levels we saw in 2011.
As we have already said, pricing and inventory levels are correlated. And we ended 2023 with the second lowest inventory levels in history.
But as I said moments ago, our sales were close to being on pace with the sales levels of 2012. And this means that we now have 2.5 times fewer amount of condos on the market than the last time we saw similar sales levels in 2012.
When comparing starts to the New Year, we currently have 97 fewer condos on the market then in 2023 and 142 more condos then in 2022.
Just like in the Single Family market, this is great news for folks who are selling condos in 2024.
And we ended 2023 strong. It was a little weird of a year for pricing, especially with the July outlier, but I expect more of the same as we head into 2024.
It’s been a pretty great run for condo prices in the state of Massachusetts. This year we saw a 7.1% year over year increase in pricing.
And look at this year over year pricing trend that we end 2023 with and go into 2024 with…
It was a pretty amazing last 6 months of 2023. This will continue as we head into 2024. What was crazy is that in the first 6 months the average sales price for a condo in Massachusetts was up 2.5%. Then the last 6 months happen and it propels the average sales price up by 7.1% year over year.
I thought we would see pricing growth in the Condo segment in 2023, but I did not expect it to be this strong!
And now for my very quick shameless plug. If you are thinking about buying or selling a home, then reach out to me today as I would be honored to help guide you through the process.
Now onto the Multi-Family market…
What a crazy year. I thought that if sales prices were going to go down, then this was the market it would happen in. I was wrong… Again.
I knew it was inventory levels and prices that were correlated, I just don’t think I realized how big the correlation is.
In 2023, there were 5,108 Multi-Family units that sold for an average sales price of $742k.
Like the other segments, there was not one month where we sold more multi-family properties then we did for the corresponding months in 2022.
But the levels were improving as we closed out the end of the year. December only sold 6.9% fewer properties than it did in December of 2022. That’s pretty impressive considering the worst year over year sales data was in February when we sold 41.4% fewer houses than in February of 2023.
So what I am taking away from this data as we head into 2024… The Multi-family market is getting better!
This was pretty ugly when you consider the year over year drop. But when you put it in perspective of yearly data… Yes, it was the worst year in recent history. BUT it was neck and neck with 2011.
And we knew this market was going to take a beating. It made sense. It got harder and harder to make the numbers work with the jump in interest rates. Rents were not going up fast enough… And investors don’t buy a property to lose money on the carry each month.
It was ugly. But I really do feel like it could have been worse.
Now let’s take a look at the inventory levels.
As we said. Sales are low. 2011 level low, but inventory is very low and a lot lower than in 2011. THIS is why we did not see a Multi-Family Pricing Correction.
Inventory is 4.4 times lower than it was at the end of 2011. Think about it for a quick second. There are only 515 Multi-Family properties for sale in the entire state of Massachusetts.
This was such a crazy year in this market with the jacked up interest rates and the enormous year over year sales declines that the pricing so called trend was all over the place.
I believe we will see some normalcy come back to this market segment in 2024.
I am looking for trends to get a glimpse as to what to expect as we head into 2024. And I am seeing good things for 2024 when I look at this year over year pricing chart for 2023.
It’s been a pretty strong four months for year over year pricing.
In the first 5 months, prices were down four out of the five months. And then in the last 7 months, prices were up six out of the seven. And with September and October notching some pretty sizable gains.
Like I said, I really do think this means good things are to come in the multi-family market.
It’s been a good run for multi-family property owners in the state of Massachusetts. The Multi-Family market got hit the hardest out of all the segments. They were most likely to see pricing declines as this is where the big run in financing would have the biggest impact.
But this market took the punches with stride. And is getting ready to do some of its own punching in 2024.
It was a tough year for market bears. People who sat on the sidelines lost more pricing power as the market did what most did not expect.
But housing and recessions are not correlated as we only saw housing prices go down two out of the last five recessions. We know what happened in 2008, but the other time was a 1.9% decrease in 1991.
We also knew that in the last high inflationary period, housing prices went up every year. History is looking to repeat itself.
So what do we have in store for us in 2024? We have pent up demand. We have a declining interest rate environment. And we have a market that has low inventory in every housing segment.
Be on the lookout for my 2024 market predictions video.
And let me know if you have any questions. You can drop me a line in the comment section below or I invite you to reach out to me as all my contact information is in the description below.
And as always, I truly appreciate you keeping me in mind should you or anyone you know are thinking about buying or selling in 2024!
Until Next Time!