Listen to Tim Warren, CEO of The Warren Group, discuss Massachusetts 2017 home sales. Click here.
JOE: Hello everyone, this is Joe Kourieh with The Warren Group bringing you our Massachusetts home sales data report for June 2017.
In June, there were 7,472 single-family home sales sole in the Bay State, compared to 7, 396 in June 2016 – that’s a 1 percent increase from last year. Joining me now to discuss the numbers is Warren Group CEO Tim Warren. Thanks for joining Tim.
TIM: Sure thing, Joe.
JOE: For two straight months now, we’ve had median sale prices that have shattered records. June’s is at almost $400,000, which is alarming both statistically and aesthetically. Is there any period to which we can compare this price escalation for context, or is this market really unprecedented?
TIM: Well, let me make a couple of observations about the real estate market in the first six months of 2017. My first point is that the median price for June of $395,000 is quite a jump. It’s $25,000 than the median price in May, and it’s the highest monthly median price ever recorded in Massachusetts, but that price is not likely to continue in the coming months. Just as the spring selling season brings more sales than in any other time in the year, it brings the highest median price as well. Every year for the past nine years, June has had the highest median selling price. It appears that people close on the more expensive home in the month of June. At the end of the year, the median for all of 2017 will not be close to $400,000. We’ll be lucky if it reaches $355,000 which is the all-time record for a full year.
Now my second point on the current market is to compare it to the previous market peaks we saw in 2004 and 2005. The history there is that the number of homes sold peaked in 2004 and then slipped by about 6 percent fewer sales than in 2005, but the median price kept rising in 2005. It climbed by 5 percent in 2005 and then it declined dramatically the next 6 or 7 years. This year, the number of homes sold has climbed less than 1 percent. I wonder if we are reaching the peaks of the market just as we did a dozen years ago.
JOE: What specific effects will this current market have on potential buyers around the Commonwealth, and do you anticipate any type of government intervention in response to the rising prices?
TIM: Well, I think the first thing we need to acknowledge is that the real estate market is not universally soaring. The biggest action is in the communities close to Boston. The Commonwealth has done a terrific job of bringing new and good paying jobs to the city and to the communities close by. Life sciences, pharmaceuticals, technology, and successful startups are competing for talent and paying to attract new hires. This helps the economy in other parts of the state, but not evenly. So the real estate marketing in southwestern, central, and western Massachusetts is not experiencing the same frenzy of activity. It’s doing well, just not extraordinarily well as it is in the greater Boston area. Now you asked about government response. I think the biggest concern of our political leaders is to create enough affordable housing to keep the economy growing. Middle and low income households are getting squeezed and can’t afford to live near where the jobs are. Teachers, police, fire, hospital, and restaurant workers are needed everywhere, but there are fewer and fewer communities where they can afford to purchase a home or to rent an apartment. The building boom is not solving this problem.
JOE: Thank you for your insights, Tim. And thanks everyone for joining us. If you would like more information about Warren Group products and services, please visit us at thewarrengroup.com.