The state’s housing market is ending 2018 much as it began: pricey and tight.
Whether that continues into 2019 will largely depend on whether homeowners decide it’s a good time to sell.
Home prices in Massachusetts continued to march upward to record highs in November, according to data released Thursday by the Warren Group and the Massachusetts Association. of Realtors. The median price of a single-family house sold in the state was $385,000, according to Warren, up 5.5 percent from a year earlier; condo prices climbed 4 percent, to $365,000.
Those year-over-year gains reflect a market that continues to become more expensive, but at a slower rate than it was rising earlier this year. The condo market, in particular, has mellowed as a wave of new buildings has brought much-needed supply to Greater Boston. The number of condo units listed for sale was up 17 percent.
Other factors are keeping a lid on things, as well.
Home prices, industry observers said, have reached a point where many buyers simply can’t afford what’s on the market, especially inside Route 128 and close to the region’s job centers. For several years, prices have climbed far faster than incomes — the median single-family price in Greater Boston topped $600,000 this summer — placing the region among the least affordable housing markets in the country, despite its relatively strong job market.
And mortgage rates, which increased roughly 1 percentage point, on average, from January through November before retreating a bit in recent weeks, haven’t helped buyers. At the higher rates, the average monthly payment on a $450,000 mortgage is $180 more, compared to what it was at the start of the year.
“The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a house,” said David Blitzer, who oversees the S&P Case-Shiller Index, which issued its monthly report Wednesday. It showed price growth moderating in many expensive housing markets around the nation. “Reduced affordability is slowing sales of both new and existing single family homes,” it said.
But the biggest factor hindering Boston’s housing market, real estate agents said, is the one that has bedeviled the area for years: a simple lack of supply at any price.
The number of houses sold barely changed in November, compared to the previous month, and has declined or stayed flat in nine of the past 12 months, the MAR said. Through the first 11 months of the year, sales were down 1.5 percent in Greater Boston, according to the Greater Boston Association of Realtors.
“Being a home buyer in November was like going to the supermarket to prepare for your Thanksgiving meal, but when you got to the store, there was almost nothing to buy,” said Rita Coffee, the general manager at Century 21 Tullish & Clancy in Weymouth and president of the MAR. “No matter how we describe it, this a trend that will most likely continue until more homes are available for sale.”
Listings had been ticking up during the fall, giving some hope to would-be buyers that there might be more to choose from. That trend reversed itself in November, however, with listings down 2.8 percent from the same month last year, according to the Boston brokers association, mostly because of a decline in the number of single-family houses being put on the market.
While condo developments continue to get built, any sustained growth in THE supply of single-family homes is likely to come ONLY when empty-nesters gradually — and finally — decide to sell houses that are bigger than they need, said Ralph McLaughlin, deputy chief economist at the real estate data firm CoreLogic.
“We need to get to the point where people want to move,” he said. “That’s what it’s about.”
Of course when they do, there will be an equally large population of twenty- and thirtysomethings eager to buy. That should keep the market relatively stable, McLaughlin said, if perhaps easier on buyers than it feels right now.
In 2019, he predicted, prices will go up, but not as fast as they did this year. Inventory will climb a bit, too. The market will feel softer, he said, but McLaughlin doesn’t foresee a crash.
“We’re expecting a more reasonable-looking housing market than we’ve had the last few years,” he said. “That’s the most realistic scenario.”
Tim Logan can be reached at email@example.com.