Finally, local real estate agents say, the market has recovered from the crash that crippled it in 2008. People have money in their pockets again, and agents are once again seeing million-dollar purchases.
Beyond the return to relative normalcy, the clear trend they’re all noticing: Inventory is down and prices are on the rise. And it’s harder than ever for first-time homebuyers.
“We’re seeing this across the state,” said Rick Sawicki, president of the Pioneer Valley Realtor Association. “The Springfield area is getting close to crisis because of the shortage.”
When inventory is low, demand spikes and sellers reap the benefits.
“The inventory here is the lowest I’ve seen in a long time,” Sawicki said.
People at local real estate agencies hope that inventory swings back up again in the spring, when they typically see homeowners get the itch to sell.
“This time of the year is not as robust, of course, as it is in the spring,” said Pat Goggins of Goggins Real Estate. “We’re heading into what we think will be a good, strong spring market.”
Meantime, high prices are making it challenging for younger prospective buyers, who also face the most stringent lending standards to date. It used to be “the American dream” for everyone to own a house, but since so much cash up front is now necessary — normally 20 percent of the purchase price — that is no longer the case.
“You have to have more skin in the game to own a house these days,” said David Murphy, of Murphy’s Realtors. “It’s harder for first-time homebuyers than it used to be.”
That fact may account for a drop in sales of single-family homes under $300,000 in Northampton — a 17 percent drop from 2015 to 2016, according to listings. The average sale for single-family homes in the city went from about $337,000 in 2015 to $369,000 in 2016, with no loss in volume — 219 homes were sold in the city in 2015, and 218 in 2016. What the Northampton market lost in the bottom bracket in 2016 was recovered in sales of homes between $400,000 and $700,000.
“We’re just now getting back those average sale prices,” said Sawicki of the pre-crash market. “You don’t want to see something that’s starting to look like a bubble, which we don’t have — in this market, they’re looking at a nice sustainable growth.”
In Amherst, the price increase was less pronounced — the median sales price went up from $329,000 in 2015 to $335,000 in 2016. Amherst, however, saw a drop in volume from 141 single-family properties sold in 2015 versus 127 in 2016, about a 10 percent decline. The median sales price for condominiums in Amherst, however, declined from $185,000 in 2015 to $170,750 in 2016 — an 8 percent drop. Condo sales also saw a 13 percent comedown in volume.
Condo sales in Northampton saw a slight dip in volume — 104 in 2016 down from 109 in 2015 — and a 4 percent rise in average sales price to $260,000 last year.
Absorption rates are low across the board, Sawicki said. This rate refers to the amount of time it takes the market to absorb one month’s supply. The rate is about 1.5 months, making it a seller’s market, whereas equilibrium is at six months. Still, he said, things are improving as inventory will come up again in about two months.
“I think we’re headed in a positive direction,” Sawicki said. “I think the market is going in the right direction, and it’s going in the right direction at the right speed.”
Amanda Drane can be contacted at adrane@gazettenet.com.