Potential homebuyers hoping for prices to ease and inventories to rise in 2020 will be disappointed.
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Potential homebuyers hoping for prices to ease and inventories to rise in 2020 will be disappointed.
While the home price hikes vary by community, they are trending upward. These high prices have not just discouraged many first-time home buyers. Potential trade-up customers, who would feed inventory when their sell their four-bedroom Colonial, are sidelined. While they can reap the benefits of buying low and selling high, many cannot afford to purchase a home in this expensive market.
Prices putting homes out of reach.
For example, in Middlesex County, the median sales price of a single-family home from January through November rose by just 2%, according to The Warren Group, the Peabody real estate market tracker. But at $535,000, the median price in one of those 81 cities and towns is out of reach for many families.
In Worcester County, the year-over-year median cost for a single-family home from January through November increased by 5.5% to $290,000, up from $275,000.
The market will have low inventory.
The biggest factor driving prices is the lack of homes and condos for sale. That’s not expected to change in 2020.
Consider these numbers from the Massachusetts Association of Realtors: In September, frequently the month with the highest number of homes for sale, there were 14,129 single-family houses for sale in Massachusetts.
Sounds like a lot, since buyers only need one.
But during the same month five years ago, MAR reports 23,355 homes were listed by Bay State brokers.
In Worcester County, more than twice as many single-family homes were for sale in 2014 at 4,059 compared to less than 2,000 in September of this year.
Mortgage interest rates will remain low.
The amount homebuyers pay for a home loan is a factor in buying a home.
A mortgage for a $300,000 home at 3.5% has a monthly principal and interest charge of $1,749. If that rate rises by 1 percent point, the payment increases by $173.
While economists said rates were expected to rise in 2019, it turns out they fell from 4.5% in January to 3.7% by mid-December. At least seven interest rate watchers say rates are not expected to rise next year. Economists from the National Association of Realtor, the National Association of Home Buildiers, Freddie Mac, Fannie Mae and the Mortgage Bankers Association and Wells Fargo say the average 30-year fixed rate loan will be 3.7%.
