We’ve made it through another Massachusetts winter and have finally begun to see the blooming flowers and sunshine we deserve. With this returning sense of normalcy, what should we expect from the North Shore housing market?
Home prices skyrocketed in 2021, increasing by nearly 20% on average in the United States. Though the high demand and low inventory remain in play as we enter the summer, the market is not expected to be as intense as last year’s.
Though sellers are still receiving multiple offers, inventory is finally starting to become more available, slowly but surely. In March, homebuyer competition fell for the first time in six months. As the supply starts to become more in line with the demand, bidding wars are becoming less frequent and intense. For sellers, this means fewer options and a need to be less selective between offers.
For buyers, this perhaps signifies less competition and slightly more freedom of choice when it comes to purchasing a home this summer. Though these trends are pointing towards “business as usual,” the market is still heavily in favor of the seller, and high interest rates severely restrict first-time buyers.
How will interest rates affect the Massachusetts housing market in 2022?
Though there is a feeling that things are calming down as we enter the summer, the cost of borrowing money through mortgages has continued to increase.
“Most experts predicted that mortgage rates would climb this year, but they did so more quickly than expected, averaging more than 4% for 30-year fixed-rate mortgages in mid-February. Around mid-April, it surged to 5.28 percent, the highest level since April 2010, and the uptick continues.”
Many potential buyers are seeing these interest rates continue to rise and are provided with a sense of urgency to make offers before these rates get even higher. This mindset makes sense when you look at graphs such as the one below, which show the average 30-year fixed mortgage rates in the United States from early 2020 to the present day. Many buyers that are in the middle price range held off on making a purchase because there hasn’t been inventory, and some decided to move now. Others who held off used their equity to make home improvements, such as adding a home office or an addition.
There is a general feeling that the housing market tends to calm down during the summertime. However, that was not the case last summer- and likely won’t be true this year either. Interest rates around this time last year averaged 3% and are currently just above 5%. Though it is true that interest rates will likely continue to rise before they taper off and fall, research indicates that there is no need to panic, as housing prices, interest rates, and housing availability are likely to slowly return to normal levels over the course of the next year.
It is impossible to predict the state of the market with 100% accuracy, so you must always make decisions based on your own financial state and needs rather than trying to time the market perfectly. Regardless of if you are looking to buy, sell, or have questions about the state of the North Shore housing market as we approach the summer, it is always a good idea to consult a professional.