At the midpoint of February, the inventory in the Newton and surrounding areas has been even lower than on the same date last year when inventory was generally regarded to have been at all-time lows. In general, inventory is running anywhere from 10 to 20% lower them at the same time last winter, with the exception of the town of Needham, which seemed to be the anomaly with ten percent greater inventory than last year. Days-on-market is generally up, which is a natural byproduct of low inventory, since the inventory that is available is often the old, picked over stuff from last year.
For many years, I have recommended that people who are ready to put their house on the market do so during the winter, with the Sunday between the AFC championship game in the Super Bowl (especially in years worth of the Patriots are in the Super Bowl) being the optimal day to consider the spring real estate market. It is usually over the winter months when property takes its biggest jump in price, as there is generally limited inventory available while most potential spring buyers are already out there in the marketplace, either ready to buy the right one comes along, or just scouting the market in preparation for what they feel is the true buying season, the spring market.
What soon-to-be Sellers often fail to realize is that he limited inventory of the winter often has the result of when a new listing does hit the market, the open house gets a swamped with Buyers and potential Buyers, with all getting into a frenzy over the “only thing on the market”, and a few Buyers end up preferring not to wait until the spring, lest there be nothing left for them in their price range. In many years, such a frenzied winter marketplace actually resulted in a slightly softer spring market, as prices peaked in the winter and softened up in the spring when more inventory was available. It was simple supply and demand. However, this year, even a relatively mild winter has not squeezed out any early inventory! Last year’s prices went up by close to double digit percentages over the winter, and they held and even furthered their increases in the spring, even after more, albeit still limited, inventory hit the market.
With inventory being so low this year, even as compared to last year, it seems only natural that prices will once again take off, since inventory shows all signs of remaining tight. With a very slight rise in interest rates, coupled with a $250,000 reduction in the amount of the mortgage from which to base a tax write off for interest (Interest from mortgages up to $750,000 may now be written off under the revised tax code, as opposed to the previous $1 million mortgage from which one could deduct the interest) people are opting to stay “grandfathered” into their existing mortgage to take advantage of the larger write-off for which they are grandfathered (holders of mortgage notes written prior to the change in the tax code can still write of the higher interest threshold), resulting in even fewer homes on the market this year more than ever before. (Note: Many homeowners may still refinance the debt from their old mortgage and continue to be grandfathered into keeping the previous $1 million mortgage amount from which to deduct the interest).
This year, with inventory being so sparse, even those properties owned by folks who are waiting until a certain date, such as March 1 or April 1, to put their home on the market, it seems that any available inventory will quickly be gobbled up by desperate buyers who have been waiting since last year to see more inventory. For those waiting to move into Newton and surrounding suburbs, especially those with children about to enter school, the only question will be is whether they will choose to rent something just to get their kids into the school system, or will they accept having to move a little further out into the suburbs, where prices are cheaper. Even beyond the Rt. 128 belt, in communities such as Natick and Framingham, inventory remains at record low levels. Thus, look for similar increase in prices compared with previous years even in communities further outside of Boston.