Saturday, June 15, 2024

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Real Estate Market Watch: 2024 First Quarter

2024 starts with a slight but comfortable overall rebound.

Overall Quarter 1 2024 real estate sales dollar volume up 6 percent, number of sales up 2 percent

In the first quarter of 2024, the volume of real estate sales rose to over $137 million dollars transacted. This total included residential, condo, multifamily, land and commercial sales. The number of transactions rose by 2 percent, or an increase of 6 sales when compared to last year. Notably, the sales of single-family residential homes, condos and multifamily units improved in the first quarter of 2024 when compared to last year, but land and commercial sales fell. Overall, 1st quarter sales are more consistent with pre-pandemic rates. A lack of available inventory remains a significant issue in the residential home market, especially in workforce housing price ranges. This is reflected in a slightly improved but still considerably lower historic inventory level.

Overall Real Estate Sales by Region

• 2023 was a tough year for home buyers finding a property within their range and being able to afford and qualify for a mortgage while rates moved up and leveled during the year.
• 2024 starts with a slight but comfortable overall rebound. Noting that the lack of home inventory remains a challenge, as does high building costs, interest rates and inflation pressure, sales are still impacted by market dynamics. We see now more than ever that looking at specific property types, locations and price ranges is critical to understanding the buyers remaining in the market and where the housing gaps are that can be filled with our current inventory.

Residential: Sales up 2 percent, dollar volume up 18 percent

Overall, the number of home sales in the first quarter of 2023 rose by 2 percent over the previous year, from 201 single-family sales slightly up from 197. North County sales dipped 7 units but rose 38 percent and more than $5 million dollars over the 1st quarter sales from last year. In the middle registry area, sales rose 8 percent and dollar volume also jumped double digits by 17 percent. In southern Berkshire, sales rose consistently by 9 percent in both the total number of sales and the dollar volume. Notably, average sales prices rose significantly in northern Berkshire, modestly in middle and remained level in south.

Condo Report: Sales rose 11 percent, dollar volume up 24 percent

Condominium sales in northern and southern Berkshire County remained level but increased considerably in middle Berkshire. Condo dollar volume countywide rose to a whopping $17.6 million dollars in the first quarter alone, the highest on record. You can note year after year appreciation in the condo prices, especially as single-family residential inventory gets tighter, condo sales pick up. The attraction of condominium living is also at an all-time high in the Berkshires, which also helps fuel this growth.

Multifamily Report: Sales up 39 percent in both units sold and dollar volume

In the first quarter of 2024, multifamily sales are booming in all parts of the county. Each region is reporting double-digit gains in the number of sales and dollar volume transacted. Despite the upswing in the multifamily market of between 1-5 units, the average sale price did not rise at all from the rate last year at the same time.

Land Report: Sales down 19 percent, dollar volume up 12 percent

After a few robust years of land sales, the market started to retract in 2022 and continued deep descent in the first quarter of 2024. Despite land parcel sales falling from pandemic highs, warmer months are more conducive to raw land transactions when testing and site work can be done before purchase and with soft ground. It is important to maintain a close eye on permits and building opportunities to help alleviate pent-up buyer demand for existing homes in popular price points. It remains incredibly hard to build needed workforce priced housing with current costs and codes.

Commercial Report: Sales down 45 percent, dollar volume down 70 percent

Despite a commercial market heavily impacted by work-from-home and business closures, commercial sales rose in 2021, dipped in 2022 and regained momentum in 2023. The first quarter of 2024 reflects slowing sales countywide, with minimal activity in southern Berkshire. Lawrence Yun, NAR Chief Economist noted that the national commercial vacancy rate rose above 20 percent in the first quarter as well. Please note not all REALTOR-assisted commercial sales are included in this data, only those on the open market are included in this data.

2024 Spring Real Estate Market Forecast:

Lawrence Yun, chief economist and senior vice president of research for the National Association of REALTORS (NAR), gave an economic update at the May Legislative Meetings in Washington, D.C. He stated that he expects interest rates to drop and home sales to pick up during the rest of the year and into 2025 and projected existing home sales to increase to 4.46 million nationwide, a 9 percent increase from 4.09 million in 2023. He also predicted existing home sales to jump to more than 5 million in 2025 and show gains in eight of the next 10 years.

Yun pointed to April employment data, which showed 6 million more jobs than pre-COVID highs. Those job numbers, he said, are boosting home prices. “More jobs mean more home sales and higher housing demand,” said Yun. “You need a strong local economy for a strong housing market.” Yun compared the current market to 1995, noting that the U.S. has 70 million more people and 40 million more payroll jobs than the mid-1990s, but home sales continue to lag at their lowest levels since 1995.

“How is it that home sales can be this low when we’ve got so many people living in this country?” asked Yun. “High mortgage rates and lack of inventory were a shock. Over the next 10 years, probably eight of those 10 years will improve for home sales.”

He reminded Realtors that referrals will be essential as market gridlock loosens. “The referral business is key,” he said. “Your past clients are super happy in terms of their wealth gains. Seven percent mortgage rates are high compared to a couple of years ago, but you have to buy a home in order to build wealth. Have Americans lost the dream of homeownership? I don’t think so.”
Yun still expects interest rate cuts, even though the Federal Reserve has yet to take that step. The full cuts that were expected for 2024 could be delayed, in part, to 2025, he said.

“The Federal Reserve has delayed rate cuts,” Yun said. “I would have thought that, by now, rates would be lower and rate cuts would have begun. Whatever rate cut the Federal Reserve does not do this year will simply get pushed back to 2025. They’re calling for a September rate cut, but we’ll see.”

Home sales in 2023 were the worst in nearly 30 years. The micro-level reasons—owners locked into low mortgage rates, low inventory, and rising interest rates—explain the fall in sales. But looking at the big picture, it makes less sense. Last year’s 4 million existing-home sales were the same as in 1995, when there were 70 million fewer people living in the U.S. The massive stored-up housing demand could easily mean increased home sales in eight of the next 10 years.

A turn for the better is already showing up: In February, existing-home sales rose 9.5 percent from the prior month even after accounting for seasonal factors and a leap year. The increase was helped by a 10 percent inventory boost. One regional exception was in the Northeast, where sales fell by 10 percent. But this region also had the largest home price gain due to a lack of supply and a wider prevalence of multiple offers.

One issue to monitor is consumer response to the rules of the new settlement agreement, which is still pending final approval by the court. Sellers and buyers clearly benefit from a cooperative arrangement between the listing broker and buyer broker, and the proposed settlement was able to maintain consumer choice with respect to offering compensation off-MLS. It’s especially important to maintain representation options for first-time, historically underrepresented and underserved, and veteran homebuyers, who often struggle to come up with a down payment. In the near term, the dynamics are hard to predict. But I believe sellers will continue to see the value of cooperation when listing agents clearly explain the benefits, such as increasing housing opportunity and widening the potential buyer pool. NAR’s goal is to preserve as much choice as possible for consumers undertaking one of the most important transactions of their lives.

To see the complete illustrated version of this report, click here.

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2023 Berkshire County Year-End Real Estate Market Watch

2023 was a mixed bag, and the market remains confusing. But there are pockets of great promise.

MARKET WATCH: January–October 2023 real estate market update

2023 Berkshire County real estate sales year-to-date in a nutshell: inventory down, prices up.

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But Not To Produce.