BOSTON Median sale prices for single-family homes and condominiums hit all-time highs for the month of October last month, but overall sales slowed as the inventory of available properties dwindles in Massachusetts.
The Warren Group reported Wednesday that there were 5,175 single-family homes sold in Massachusetts last month, a drop of 0.9 percent over October 2017. Analysts said a lack of inventory is keeping the number of sales down.
“Demand continues to be strong, and there’s no doubt in my mind that if there were additional homes available on the market, we would have seen a spike in sales last month,” Warren Group CEO Tim Warren said.
Meanwhile, the median sale price of those homes increased 3.9 percent to $374,000 last month, up from $360,000 a year earlier. So far this year, the median price has risen 5.5 percent to $385,000, which Warren described as “in line with the country as a whole.”
Town-by-town data shows how conditions vary around the state. The median price of the 22 single-family homes sold last month in Andover was $540,750, which represented a decline of 18 percent over October 2017. In Arlington, the median price was $774,500 last month for 36 homes sold while the median price of the 39 homes sold in Chicopee was $184,000. Winchester saw a median sale price of $1,091,250 last month while the median price in Pittsfield was $161,250.
The steady increase in home sale prices and the strong demand in the real estate market are signs of a strong economy and steady job growth, Warren said.
“With a booming economy and a tight job market, consumers have confidence in the future and real estate purchase is really about a long-term investment,” he said in a podcast. “It’s really a vote of confidence in the future.”
There were 1,920 condo transactions in Massachusetts last month, a 7.6 percent decrease from a year earlier. The median condo sale price increased 0.5 percent to $333,000 in October and has climbed 7.4 percent to $365,000 year-to-date, the Warren Group said.
Strong and Weak Markets
At a conference for state investors Wednesday, UMass Dartmouth economist Michael Goodman described the state’s housing picture as “a tale of strong markets and weak markets.”
He said the strong markets -- the communities most convenient to Boston and other desirable locations -- are “pretty Teflon, pretty resistant” to changes in the economy. In the weak markets, rents are too low to lure development away from the Boston area.
“Getting stuff done in other parts of the state has been increasingly difficult,” he said. “So if the rent is too damn high in Boston, it’s too damn low in New Bedford. So low that you can’t get anything built without a subsidy or a federal tax credit.”
Warren echoed that sentiment in a podcast released Wednesday as he discussed Gov. Charlie Baker’s push for legislation to spur housing production.
“Governor Baker is not alone in looking for more housing. New housing units are in demand by not just the governor but by many mayors and economic development professionals, they’re all eager,” Warren said. “The most difficult part of it is to make more of what is built, making it affordable. The developers are eager to put up units in the luxury, upper-end price range, but affordable units are hard and require public funding or a subsidy or some kind of creativity to really make it happen.”
Warren said Baker and others are making “good efforts” at encouraging more housing development, but said those efforts “will never completely solve the problem.”
“What we need is to do a better job of matching new jobs being located where there is already low-cost housing,” Warren said in his podcast. “Creation of new jobs in Cambridge and the Fenway or in the Seaport is part of the problem. These already have expensive housing in the neighborhood and new jobs there just drive the prices up even further.”
Goodman told investors Wednesday that one issue with the Bay State’s housing market -- the short supply of housing that’s affordable to many of the young workers the state’s economy relies upon -- is “increasingly a competitive disadvantage” for the state.
“I think the biggest issue for Massachusetts vis a vis housing is that we have inadequate supply and an affordability problem precisely at the place in the price pyramid where our younger families need to be,” he said Wednesday. “So if we’re going through this generational transition and we’re expecting our children and grandchildren to take over for us and we want them to pay a billion dollars for our house, something doesn’t really give.”
Housing production legislation stirred a lot of talk this legislative session, but has failed to gain traction and may remain on the agenda in 2019.