January 2023 Massachusetts Real Estate Market Update

YOUR Massachusetts Real Estate Market Update for the Month of January, 2023

-          In this video, we will go over the Massachusetts Real Estate Market data for what happened in the month of December 2022 for Single Family Homes, Condos and Multi-family properties.

Hi I am Jeff Chubb – A recovering Investment Banker turned Real Estate Agent that has sold more then a 1,000 homes and is one of the states top agents. And if you like hearing about the MA Real Estate Market, then be sure to hit that subscribe button!

Let’s dig into the data and start with the Single-Family market

Single Family

-          In December of 2022 we saw:

• 3,390 Single Family Homes Close
• Average Sales price of $673k

-          This represents a negative 2.1% Month over Month decrease in the average sales price and a 3.6% Year over Year average sales price increase.

-          We saw the amount of unit sales down by 31.4% year over year.

That is the data. Let’s take a look at what it all means.

-          The # of units sold is down. This is to be expected.

• Take a look at the year over year comparison chart. This gives you a really good feel for the story of 2022. (graph 1)
  • We were running neck to neck with 2021 until June. And that is when the wheels started falling off if you will. And this all makes sense and was by design with the increasing of interest rates.
  • We are back to “Normal” market levels. This is an AMAZING thing. It is sustainable.
• Now when we look at year over year sales comparisons, you can see that the trend continues with now 18 months of year over year sales unit declines. (Graph 2)
  • Guess what, this will continue. I think it could be until June or July until we ultimately see this trend to change.
    • Why June or July? Because that is when we started to see the brakes hit on the market this year. AND that is when it is predicted that interest rates will start coming down.
• The interesting part remains that with the huge decreases in the number of homes sold… We are still not seeing a surge of inventory.
  • I know I have said it before, but it’s worth repeating again. For the market bears out there… You can’t have a huge tumbling of prices if the supply and demand curve isn’t changed… Or to say it another way, if the amount of supply doesn’t go up by a considerable sum.  
• So how bad was December from a sales perspective?
  • Well here is a chart of the December sales activity since 2004. (graph 3)
    • The units sold puts us in line with the sales volume of 2012. For historical references, what happened in 2012?
      • The average home price in MA increased by .87%.
      • And we sold 42,723k units in 2012.
      • As of now the data is pointing to my prediction being correct for what 2023 has in store for us.

-          So let’s talk appreciation

• Year to date we have seen an appreciation rate of 8.82% for the state of Massachusetts. (Graph 4)
  • In one of my next videos where I do a market recap for all of 2022, we are going to be digging into that number and really exposing it for what it is.
• But take a look at our year over year price gains for each month of 2022.  (Graph 5)
  • You continue to see the trend line decreasing.
    • We had a small increase in November, but December went back to being more of the same.
    • I think it is important to note that this is not a sign of a market crash by the way. We just waded through a pretty tough Fall market and the average sale price was still up by 1.62%.
• In my opinion however, this market is more fragile then the data would even have us believe.
  • What do I mean by that?
  • Well this market could break either way. We are walking a fine line of balance right now.
    • If interest rates go down considerably and very quickly… You will see a rush of buyer demand. The market balance breaks and we are back into the crazy and awful times of 2022.
    • If the economy falters or the FED needs to continue to pound the interest rate drum… Then the market could just as easily break the other way where you have people needing to sell and inventory increases by a lot. Or a scenario where distressed properties flood the market because of a very bad economy.
    • Like I said, the market is fragile in my opinion.

-          Everyone is talking about how sales are down, but they always missing the other side of the story.  Economics 101. You can’t just talk about the demand curve and not address the supply side of the curve.

• So let’s do that. Take a look at the inventory levels for December in the last 12 years.
• Yes, we are up compared to the last two years. But look at those 2012, 2013, 2014 inventory levels. We have a quarter of the amount of inventory on the market today then we did back then WITH the same amount of sales that we had back then.

So onto the Condo market… But first, if you are liking hearing about the MA real estate market, then please consider subscribing… And I can’t tell you how much I appreciate you hitting the like Button as it makes a huge difference to the Youtube Gods!

In the Condo Market

-          for December of 2022 we saw:

• 1,323 Condos Close
• Average Sales price of $487k

-          This represents a negative 4.4% Month over Month decrease in the average sales price and a negative 2% Year over Year average sales price decrease.

-          We saw the amount of unit sales down by 35.6% year over year.

That is the data. Let’s take a look at what it all means.

-          Just like the Single-Family market, the condo market was going neck to neck in 2022 with the sales activity in 2021…. Then June came around. (Graph 7)

• Again, we expected sales to decline. We are comparing this year to 2021 which was one of the best years in real estate and were in the midst of historic interest rate increases. A slowdown was inevitable.
• The condo market remains our softest market.
  • And like I said in November… What worries me is the sales activity continues to show no rebound.

-          We have now seen 13 months of year over year unit sales decreases in a row. (Graph 8)

• Just like in the sales market, this will continue until at least June or July of next year when we get into sales levels that are more “normal”.

-          So let’s take a look at the average sales price for the Massachusetts Condo market.

• Get used to this graph. This is what I believe 2023 will look like for both the Single Family and Condo market. The year over year average sales prices will continue to play hop scotch month after month.

-          And then there is the year over year data. (Graph 9)

• This graph clearly illustrates the average sales price was going down in the last half of the year. And we have now recorded two year over year pricing declines in the last 4 months.

-          Then there are the inventory levels for the condo market. (Chart 10)

• As of the end of December we had 1,668 condos on the market.
  • That inventory number is still very low compared to past years. (Graph 10)
  • Compare our inventory levels to 2012 and we are currently 58% below those levels.
  • Inventory is still tight in the condo market… Even with the decrease in sales.

-          So onto the Multi-Family market…

Multi-Family Market

-          In December of 2022 we saw:

• 491 Multi-Family Homes Closed
• Average Sales price of $681k

-          This represents a -.85% Month over Month decrease in the average sales price and a 1.83% Year over Year average sales price increase.

-          The amount of unit sales was down by 43.9% year over year.

-          Until this month, the multi-Family market has been a rock and been very strong from a pricing standpoint. I mentioned some headwinds in last month’s month end market update… Could these be it?

• As a recap, the headwinds were rental rate growth slowing and some markets even seeing rental rates decline. This while interest rates and the cost of ownership continues to increase.
• Looking at the year over year unit comparison (Graph 13)
  • Sales have been off since June.
  • And with each passing month... They have continued to get worse and worse.  
• And with this month resembling a blood bath from a sales perspective… The average sales price reflects that narrative as well. (Graph 14)
  • Since April, price gains in the Multi market have been relatively steady.
• Now inventory levels for multi-Family properties continue to drop. This is to be expected as this is a seasonal trend. But the multi-family market isn’t as affected by seasonal trends as the others.
  • It doesn’t matter the time of year. When an investor sees a good opportunity and they have means to buy it, then they will do it. Much less emotion involved in buying an investment property.
  • So, what do the December inventory levels look like compared to other years??? Thought you would never ask… (Graph 15)
    • Our inventory levels are 59% below today then the levels we saw in December of 2012.
    • Inventory is still strained in the Multi market as well.

Want to talk about your personal real estate needs?

-          My info is in the description below. I always love to talk real estate.

• Whether you are looking to buy in the next 9 or 90 days, then I would love to chat with you and find out about your real estate goals.

Questions or comments about the market data?

-          Drop me a line in the comments section below. You take the time to watch the video, so I will always take the time to answer.

An informed person is a powerful person.

So until next time.