The low housing inventory is actually good news for homeowners thinking of putting their homes on the market now rather than waiting until the spring.
Current housing inventory levels are at their lowest levels since 2004 for the month of January. As of today there are just 17,907 homes on the market in Massachusetts, a decrease of 5% compared to the same period last year when there were 18.926 homes on the market.
On Market Inventory for Massachusetts
The chart below shows monthly housing inventory levels for the past 10 years.
(click to enlarge)
Why is this good news for home sellers? Fewer homes on the market mean less competition for your home and more attention from buyers. And buyers in the winter months tend to be more motivated since they are either relocating, downsizing, or simply don’t want to compete with the larger number of spring home buyers so they’ve decided to search for a home now.
As the inventory levels go down, demand for homes is going up. Lawrence Yun, chief economist of the National Association of Realtors®, said existing-home sales across the country have shown a 20% cumulative increase over the past two years, while prices have gained 18%.
Home sales in Massachusetts this year increased almost every month compared to the same month last year. And if you think home buyers aren’t active in the winter months, there were more home sales in Massachusetts for the first two weeks of December than there were for the first two weeks in May or April. With high demand for homes and low inventory, home prices continue to increase as well.
|2013||# of Homes Sold||Ave Selling Price|
Interest Rates Are Low—But Will Go Up in 2014
High demand for homes has been fueled by low interest rates which give buyers more purchasing power. Right now home buyers want to lock in the low interest rates which are expected to rise to 5.5% by the end of 2014, so home sellers should not wait to put their home on the market.
Another factor that could affect rates in the coming year is that Fannie Mae announced last week it would raise the fees it charges to lenders. Lenders, in turn, would pass these fees on to borrowers. On Friday, incoming director of the agency that oversees Fannie Mae, Congressman Mel Watt, said he plans on delaying these increases when he is sworn in on January 6th. Although there’s uncertainty when exactly these fee increases will take place, it is likely it will happen before the end of 2014. The amount of these fee increases will depend on factors such as credit scores and the amount of the down payment. For example, for a 30-year mortgage, a borrower with a credit score of 735 making a 10% down payment will pay fees totaling 2% of the loan amount, up from 0.75% right now.
Homes Selling Faster Now
Home sellers should also take advantage of the fact that homes are selling faster now than they did even a year ago. Since there are so few homes to choose from, home buyers aren’t hesitating to make offers and the homes are now selling almost a month faster than they did last year at this time. Current number of days on market is 86 compared to 115 days in 2012—an average of 29 fewer days that homes are sitting on the market.
What’s the Housing Inventory in Your Town?
Low housing inventory is affecting towns all across Massachusetts, not just within the Metro Boston area. We’ve compiled sample data from 2003 to 2013 to show you how much inventory numbers have dropped in the past 10 years for these towns in Massachusetts.
Click on the town to view the current inventory numbers:
By the spring more homeowners will put their homes on the market, raising inventory levels, and the interest rates will likely be higher than they are now. As you can see from charts, inventory levels usually begin to increase by the spring months, and don’t return to low levels until the following winter. For these reasons, home sellers should take advantage of the current market conditions now and list their home before the spring.