Nick discusses our newly launched annual report looking at Boston real estate market trends in 2018. He also responds to many news outlets' reports that the market will slow down soon - see what he thinks.
Looking at the 2018 Annual Warren Report: Condo Edition, what trends do you find interesting?
In my opinion, an annual report gives you a much clearer picture of the market compared to what a quarterly report can provide. In many cases, a quarterly report’s data can be skewed by outliers simply because the sample size is too small. An annual report has enough data to verify the trends we thought we were seeing in the quarterly reports. From what I can see so far, the annual report has confirmed the same trends that we started to identify in the Q3 2018 report: longer days on market, more price reductions, and increased inventory. For example, when looking at Boston as a whole, the condo listing inventory on 12/31/17 was 460 units but on 12/31/18 it was 636 units, a 38.26% increase in available inventory. Another example is the number of condos which had price changes in 2018 which were 1539 vs. 1257 in 2017, a 22.43% increase.
How do you see the Boston real estate market developing over the first few months of 2019?
The toughest thing to gauge is how quickly the gap between seller expectations and the actual market will close. Right now, a lot of sellers are still in the mindset that we’ve been in for the past half decade. Many think they should be receiving multiple offers over asking price after the first open house. This will result in a lot more listings sitting on the market until agents are able to convince them that the 2019 market is different than 2017 and 2018.
Once that gap closes, buyer frustration will start to dissipate and I believe we will see more transaction volume than we even saw in 2018. I can already tell you that the feedback I’m hearing from our Berkshire Hathaway Warren Residential agents is that the activity during the first couple of weeks in 2019 has been much greater than they were seeing towards the end of 2018. If the weather cooperates (knocks on wood), we could see a very busy winter market resulting in an even earlier start to the spring market.
Many news outlets are hinting that the last real estate boom may be coming to a slow down, what do you think about this?
I think it is completely true. We’ve been feeling the change start to happen all the way back in the middle of 2018. The 5-7 years of double-digit annual appreciation (2-4x’s historical averages) in many Boston neighborhoods isn’t something that is sustainable or healthy in the long run. What I believe we are seeing is a return to a normal market. We will see appreciate rates slow but I don’t think we will see depreciation happen in or around Boston. Rates are still low, the economy is strong, and if the stock market continues its roller coaster ride, more and more people will look to put their money in real estate.