AMHERST — In a trend carried over from years prior, local real estate experts are predicting that 2018 is going to be a hot residential real estate market — for sellers.
A continuing shortage of housing inventory, coupled with relatively high demand, have caused an increase in pricing that bodes well for sellers as springtime — peak home-buying season — approaches. That same trend, however, may squeeze first-time homebuyers and those looking to purchase more affordable homes.
“I expect it to be a hot market to the extent that there is inventory available,” said Ed Alford, president of the Realtor Association of Pioneer Valley.
That last bit — whether inventory is available — is key. In the fourth quarter of 2017, the country’s housing inventory experienced its steepest decline since 2013, according to a report from the real estate website Trulia. The result is that “homes are now the most unaffordable since Trulia started keeping track in 2012,” the report reads.
For sellers, however, that means a boon; more prospective buyers are making offers on their home, which is likely to sit on the market for far less time than is usual.
“That’s a lot of competition, and wherever there’s competition and limited supply, you’re going to see people competing for property,” Pat Goggins of Goggins Real Estate said. “And that benefits the sellers.”
To put that competition into perspective, Alford said that the average number of days that a home sits on the market dropped 17.3 percent to 79 days from 2016 to 2017. In a neutral market, he said, a home typically sits on the market for 180 days.
“With the decrease in days on market, you’re typically going to have a stronger seller’s market and a higher sales price,” Alford said.
“I think we’re starting to come out of the general market malaise that developed during the downturn of the economy,” Goggins said of the seller’s market. “I think that’s what you’re seeing.”
Low inventory is an issue in large part because no new development is happening in the region, Goggins said. And after the economic crisis of 2008, banks have more stringent lending requirements for development, he added.
“Fewer people are looking to develop and fewer people are building on spec,” he said. “There’s a lot of risk aversion in the marketplace.”
With mostly just existing housing stock on the market, median sales prices have continued to rise.
In Hampshire County, median sales prices for a single-family home have jumped from $250,000 in 2015 to $260,980 in 2017, according to data from The Warren Group. For condos, median prices have increased from $179,900 in 2015 to $207,250 in 2017.
Median sales prices for single-family homes in towns with 50 or more sales were the highest in 2017 in Amherst — a three-year high of $337,000 — Hadley ($318,000) and Northampton ($300,000), according to the data.
Brad Spry, a sales agent with Coldwell Banker Upton-Massamont Realtors, said the segment of the market that has been most affected by low inventory are more affordable houses in the price range from $250,000 to $400,000.
“I think what we’re really talking about here is the entry-level type housing,” Alford said. “When you get to the high-end market, you just don’t have that amount of demand.”
That might bode well for those selling their homes, but for first-time homebuyers or those looking for cheaper housing, the situation can be discouraging.
“Buyers are getting frustrated because they end up in multiple offer scenarios,” Spry said. That means the price of the home gets bid higher, which can be bad for both the person who ends up buying the home and those who are outbid. “They really have a feeling of settling for something rather than achieving their goals in the marketplace.”
Despite the numbers indicating a seller’s market, however, that is not the case in every Pioneer Valley community. In some, sellers are having trouble finding any buyers.
“We have very strong markets in certain pockets, and very weak markets in others,” Spry said. In some of the Hilltowns, for example, Spry said sellers are concerned. “Those markets are not selling well, prices are depressed, homeowners are struggling.”
Spry attributes that difficulty to what he called a “technology gap.” In the digital age, buyers are increasingly less likely to purchase in an area with issues like spotty cell-phone coverage and poor internet connectivity, he said.
“Families will not move to a marketplace without technology for a family to consume,” Spry said.
Dusty Christensen can be reached at dchristensen@gazettenet.com.