Tight Inventory Makes Finding Home Harder
Originally Published on The Boston Herald by Jennifer Athas
It’s home sweet home — if you can find one.
The trend of low home inventories continues into 2013, as prospective buyers had 23 percent fewer homes to choose from this week statewide, compared to a year ago, according to data from the MLS Property Information Network.
In Boston alone, the number of units currently for sale is down a staggering 45 percent compared to last year.
“We continue to see extremely tight inventory in the market and there is less than a two-month supply in the downtown Boston housing market,” said Kevin Ahearn, president of Otis & Ahearn, a Hub residential brokerage firm.
Across Massachusetts, a variety of cities and towns are at critically low inventory levels. Quincy’s stock of homes on the market is down 54 percent, while Needham’s has fallen 36 percent and Peabody’s plummeted 24 percent — all as of Monday, compared to a year ago.
“Inventory is low for several reasons. Strong job growth during the recovery in and around Boston has boosted housing demand,” said Jed Kolko, chief economist at real estate website Trulia. “At the same time, there have been several years of relatively little construction, so few new homes have been added to the housing stock.”
Unsold inventory is a primary indicator of market stability. A “healthy” housing market has 51⁄2 to six months of available inventory.
“The last time Boston saw inventory levels this low was in 2000 when there was 2.1 months of supply on the market,” Ahearn said.
In 2004, just before the housing boom, inventory in Boston was at 4.1 months of supply and new developments were being built. The Millennium Place luxury project downtown is the only major condo development currently under construction in Boston.
Richard Baumert, partner at developer Millennium Partners, said buyers have been “extremely receptive” since the sales office opened in October. Prices for the 256 units in the 15-story building, set to open next October, range from $550,000 for one-bedroom units to $3.5 million for penthouses.
“Initial sales at Millennium Place have been very strong, and we are pleased at the momentum that has continued to build in 2013, Baumert said.
Besides the lack of new developments, inventories have been decimated by potential sellers holding on to their homes a bit longer, and by a surge of buyers trying to take advantage of record-low interest rates.
“Sellers who expect prices to keep rising might delay putting their homes on the market in the hopes of getting a higher price a few months or a year from now,” Kolko said.
Alex Lopez, a broker at Keller Williams Realty on Beacon Hill, said bidding wars have become commonplace in Boston, driving up prices.
“The inventory shortage, previously confined to lower-priced homes, now includes all price points,” he said.
Jennifer Athas, a licensed real estate broker, can be reached by email at firstname.lastname@example.org. Follow her on Twitter @JenAthas.