Will low inventory off-set seasonal savings homebuyers enjoyed in the past?

InterestRates_RETippingPoint

#REonTap = Discuss over beer:  Are interest rates above good news or bad news?  Will low inventory levels off-set seasonal savings homebuyers have enjoyed by timing the market?

In the past, nearly 1 in 5 homes offered accepted between Thanksgiving and New Year’s across Massachusetts resulted in homebuyer savings of at least 10% off the original asking price.  As the housing market enters it’s traditional “slow-season,” let’s talk about two alternative scenarios this weekend at #REonTap:

1.  Will near-record low-interest rates make savings opportunities even greater because of reduced monthly payments (see image above), or

2. Will low inventory of homes for sale and record-low mobility rates offset seasonality denying homebuyers the bargaining power they once enjoyed?

Background

Artificially low-interest rates continue to bloat purchasing power, or as Realtors like to say, increase the “Affordability Index.”  KCM (Keeping Current Matters), a content creation service for real estate professionals, has taken it upon themselves to “Bust the Myth about Housing Affordability” by publishing images like the one below and cherry picking stats without any context for potential risks (see excerpt from Instagram):

Lower rates have also increased the buying power for prospective homebuyers looking to purchase the average-priced home by the equivalent of 15%.”

In isolation, the stat above sounds compelling until one begins asking questions about the potential risks of bloated purchasing power as the economy approaches the end of an economic cycle.  Invite those questions over beer or add you to one of @RealEstateCafe’s virtual roundtables where we’re asking if the Boston housing market has already reached a #RETippingPoint.  There you’ll find links to demographers and economists independently urging buyers to future-proof homebuying decisions against a possible recession and inevitability of the Great Senior Sell-Off:
http://bit.ly/SrSellOff (share via social media)


#REonTap = Informal conversations over beer where local residents can exchange perspectives, share insights and apps they’re using to save money on real estate.  Willing to meet this weekend at Cambridge Common Restaurant, text 617-661-4046 to suggest a time that works for you or follow #REonTap on Twitter.

Links to share with friends via social media related to this weekend’s topic:

Holiday homebuyers: 1 in 5 homes sells for at least 10% off, expect more this year!

http://bit.ly/OffSeasonRE_10PctSAVE

Cost Across Time:  Average Interest Rate & Mortgage Payment (image above)
http://bit.ly/iCovery_1970v2020

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Holiday homebuyers: 1 in 5 homes sells for at least 10% off, expect more this year!

Exps_111704_05_2How much excess housing inventory is on the market in Massachusetts compared to past years, and what will that mean to holiday homebuyers?  According a Boston Globe article entitled, Season can leave buyers in good cheer (November 30, 2003)

"…November and December are typically the two months with the fewest number of houses for sale. Between 1997 and 2002, the average number of homes on the market in Massachusetts in any given month was 33,636. The November average was 29,733, and the December average was 28,378."

Two years later, a simple tally of MLS listings in Massachusetts shows 44,646 single family, condominium, and multi-family properties currently on the market.  Add land parcels, and that number rises to 47,476 listings.  If you use the first figure, the inventory is up by 50% over November 2003.  If you use the second, inventory is up over 60%. 

What’s that mean for the average homebuyer?  As The Real Estate Cafe told the Boston Globe in November 2003, end of season markdowns make the holidays an ideal time for homebuyers to bargain hunt:

According to [our] analysis of listing data between 1996 and 2002, one in five Massachusetts properties that went under agreement between Thanksgiving and New Year’s Day sold for at least 10 percent below the original asking price. 

Larger savings are possible this year because of the oversupply of inventory and the soaring number of expired listings as shown in the graph above (click on image for larger view).  If you’d like to learn how you can time the market to maximize your savings and stretch your savings enough further with our unrivaled commission rebates, give us a call at 617-661-4046 or email us RECafe@mac.com.

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