From January 1st through March 31st, residential single family real estate sales transactions reported to the Berkshire County MLS decreased evenly countywide by 30 percent in the total number of transactions from 280 sales in 2022 compared to only 197 sales so far this year. The total dollar volume transacted during the first quarter of 2023 also fell when compared to last year, down 38 percent from $123 million to $76 million countywide. This reflects a modestly falling median sale price, 9 percent down from $303,000 last year to $275,000 this year-to-date.
As of the end of March 2023, there were only 434 single family residential homes for sale countywide, 99 multifamily units for sale, 324 land parcels for sale and 67 condos for sale. This significant lack of inventory of homes for sale continues to impact our sales market. This has kept it a very competitive buyer’s market, despite interest rate fluctuation and some economic uncertainty.
You can see with a look prior to the pandemic, our dollar volume is leveling out, but the number of sales is still significantly lower due to the inventory issues. Many buyers who would otherwise move into a different type of housing (upsize or downsize) are worried about finding adequate housing to move into if their current home is sold.
During March, we solicited feedback from area REALTORS and 47 percent of those that responded indicated that they saw an increase in calls from potential sellers, while 26 percent saw seller activity decline. The far majority saw buyer activity increasing, with 58 percent seeing a spike in new buyer clients and 32 percent saw their buyer client base remain stable.
We asked Berkshire REALTORS about their overall confidence in the market during the next 3 months and 58 percent that responded said they expect an improving market with more listing and buyer activity as the spring gets underway. Traditionally, spring is the most robust market for real estate sales in Berkshire County, but we have found the pandemic years saw more consistency in a year-round surge.
Much like Berkshire County, Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors, agreed that nationwide the second quarter is the most active three-month cycle of the year for listings, buyer interest and home sales. “Two of the busiest selling months are May and June, with June typically the peak month of the year,” she says.
Overall, REALTORS mentioned that we’re returning to a more stable market after several years of unsustainable growth. They are still seeing properties going under contract right away and are still experiencing multiple offer situations, but only for homes in traditionally popular price ranges and realistic asking prices. Efforts to address creating new housing, incentivizing local regulations that would increase habitable space and creating sensible zoning that can help the housing crunch is critical for the short- and long-term health of our community, both in homeownership and in rental availability.
As we talk about a lack of housing for the workforce in Berkshire County, it’s interesting to note that many of our buyers express concerns about local regulations regarding short term rentals and accessory dwelling units. While there is confidence in purchasing real estate, when paying a premium there is a desire to ensure the investment is good in the long run.
Based on data from the National Association of REALTORS (NAR), pending home sales grew in February for the third consecutive month, but nationwide year-over-year sales are still slower than last year. Chief economist Lawrence Yun had said that pending contracts have turned the corner and will continue trending up. “Mortgage rates have improved in recent weeks after the federal government guaranteed the status of most mortgages amidst uncertainty in the financial market. While access to commercial mortgage loans could become increasingly difficult, residential mortgage loans are expected to be more readily available,” said Yun.
Our hope for a vibrant spring market is a little hesitant with concerns about bank stability. “If issues in the banking sector persist,” says Evangelou, “mortgage rates will likely drop faster than expected. I see the average rate on a 30-year fixed mortgage to be around 6.2 percent this quarter.” As of press time, rates were at 6.8 percent for a 30-year fixed.
Sam Khater, Freddie Mac’s chief economist said, “Over the last several weeks, declining rates have brought borrowers back to the market but as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers.
Decreasing mortgage rates bode well for a potentially active spring market and will ramp up an already hyper competitive market while inventory issues remain unabated.
Please click here for a look at the full regional and town-by-town Berkshire REALTORS Quarterly Market Watch Report.
