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If recent headlines about the housing market have you confused about whether you missed your opportunity to sell or feel you can no longer afford to buy a home, here’s what you need to know.
We all know that during the pandemic, mortgage rates hit record lows, and that spurred a significant rise in buyer demand. The flood of buyers storming the market far exceeded the number of homes for sale and that drove up home values more than 25%, on average, in Massachusetts alone. Looking forward, trusted industry experts predict home values will increase an additional 11% in Massachusetts by the end of 2022. The projections for 2023 are slightly lower at 6-8% but that is still significantly higher than the stock market. Ah yes, the stock market. 30-40% loss this year was really tough to swallow! Poor performing investments aside, the current selling market is still strong as illustrated in the chart below.
|
Town |
Average List Price* | Average Days on Market | Average Sales Price |
% Over List Price |
| Grafton | $628,135 | 21 | $662,114 | 5% |
| Hudson | $543,776 | 22 | $570,859 | 5% |
| Marlborough | $573,776 | 22 | $596,533 | 4% |
| Northborough | $700,203 | 25 | $733,957 | 5% |
| Shrewsbury | $659,554 | 20 | $693,511 | 5% |
| Southborough | $1,060,020 | 12 | $1,105,829 | 6% |
| Westborough | $728,167 | 23 | $752,910 | 4% |
| *Single family units recorded with the Multiple Listing Service March-September 2022 | ||||
Conversely, many disillusioned buyers are pulling out of the market, citing inflated prices, unfavorable terms and rising interest rates. While mortgage companies continue to adhere to stringent lending guidelines, many are creating new products to combat the rising interest rates and assist buyers in competitive situations. Furthermore, while the market favored sellers for the last two years, a gradual shift towards a balanced market is making conditions more favorable for buyers. In the scenario below, I discuss why real estate is still the best investment and encourage prospective homebuyers to persevere.
Let’s suppose I pull $155,000 out of the stock market to use as a downpayment on a $775,000 single family house. Not only will I avoid having those funds drop to $100,000 due to poor performance in the stock market as referenced above, but my home may be worth more than $860,000 by the end of the year. Yes, that is a realistic $85,000 increase in equity in three months. After I factor in the fact that I avoided a potential loss of about $55,000 by keeping those funds in the stock market, my net worth increased by a total of $140,000 in less than three months! Assuming a 7% increase in early 2023, my home value will increase to $920,200 and potentially upward from there. This all started with a purchase price of $775,000 today. And don’t forget that mortgage interest is also a tax write-off, along with some closing costs.
Bottom Line:
Knowing the right time to buy or sell real estate is a personal decision. The best advice I can give anyone is: 1) stick to the facts; 2) review the data; 3) observe the predictions of the industry experts; 4) speak to a trusted financial advisor and/or mortgage officer; 5) discuss your goals with a knowledgeable and experienced real estate agent. The best decision is always an informed one.
Boyle lives in Northborough where she is also a Chapter Leader of the Neighbor Brigade, a non-profit charitable organization that assists families in times of crisis. She has been a real estate agent since 2005 and is a member of the distinguished RE/MAX Hall of Fame. Boyle is also a Children’s Miracle Network “Miracle Agent” for her commitment to making a donation to Boston Children’s Hospital on behalf of every home buyer and seller she assists.
Boyle’s mission is to empower her clients to make smarter decisions through data-driven insights and local market knowledge. She invites you to call or email her for the Fall 2022 Home Buyer and/or Seller Guides or for a complimentary market analysis.
