With all we’ve been hearing about massive inventory shortages across the country, and things not feeling much different here, it is surprising to see that inventory in the Boston area has actually increased substantially both month-over-month and year-over-year. In Middlesex County, the number of single family homes for sale last month was up 29.1% from where it was in February 2011. This sounds like great news, and in fact it is good news, but the numbers are a little deceiving. Demand is also on the rise, and even with hundreds of new listings on the market, the ones that are well-priced and in good condition receive multiple offers and fly off the shelves. In Middlesex County, 17.2% more single family homes sold last month than in February 2011. But remember last year’s winter? By February, more than 60 inches of snow had fallen! It was nearly impossible, even for someone who really wanted to sell her home, to find a spot in her yard where a ‘For Sale’ sign would stick out above the snow. You don’t need us to tell you that this season has been quite different, and the same goes for the real estate market. The blossoms, birds and buyers have come out early, with sellers starting to spring up as well.
“My clients submitted one of 11 offers on a Lexington home that hit the market last Friday,” said Risa Bell, Agent on Redfin’s Boston team. “More than 100 people attended the open house on Sunday, and offers were due Monday evening at seven. Our offer was very competitive, with an offer price considerably higher than asking, plus almost 50% down, and we still lost out.” While many potential sellers are reluctant to put their homes on the market now with prices still relatively low, “today’s prices are tomorrow’s comps.” Risa explains, “Homes that go under contract today will close in seven or eight weeks, and their sales prices will then be published. Higher priced comparables and reports of rising home prices will justify higher listing prices, which will be welcome news for those hesitant homeowners.”
For a complete picture of the local market’s recent stats and trends, download the Redfin Market Report here: Redfin-Boston-Real-Estate-Market-Report-February-2012. Want to know how the Boston real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:
*Redfin Heat Index Methodology
The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:
MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
$YOY = Year-over-year change in the median price per square foot.
Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75