As we enter into the fall market, it is a great time to gauge the market direction. Are home values correcting? Will there be a bubble? Are we in a housing crises?
Let’s Listen to the Experts
The Joint Center for Housing Studies of Harvard University released the 30th anniversary of State of the Nation’s Housing series. The good news is about an uptick in homeownership in 2017 for the first time in 13 years. Despite rising market values, low interest rates have helped keep monthly costs affordable for homeowners. However, going forward, rising interest rates, lack of inventory, and rising student loan debt raise important concerns.
This chart shows data for Boston, Cambridge, Newton
The report continues with an in-depth analysis or the national housing market, both residential and rental, by measuring at the movement in various price sectors, demographic drivers, construction activity, and more. The forecast for market values is optimistic overall with continued climb in home prices. You can read the full report for more details.
The analysis examines how some of today’s conditions echo the past and are a yardstick for the progress we as a nation have and nave not made in fulfilling the promise of a decent, affordable home for all. Excerpted from the Executive Summary.
Throughout the report we revisit the many reasons why we are not seeing “decent, affordable home(s)” for all. Rising housing costs, rising land prices have kept older homeowners from moving resulting in fewer older homes on the market. New construction has also been limited.
Barriers to New Construction
There are 4 major impediments to homebuilding:
- Shortage of skilled workers
- Rising cost of building materials
- Scarcity of developed land
- Local zoning and other land use regulations constraining the type and density of new housing allowed.
From the series from NPR.org The New Housing Crisis: Shut Out Of The Market
Housing experts tick through a list of reasons for the slow pace (of new construction): There’s tougher zoning, there’s not enough undeveloped land, lumber is expensive … and one of the biggest problems, a labor shortage. ~ Excerpted from NPR.org
Great Boston Area Market
The severe lack of inventory in Boston, Cambridge, Somerville, Newton and surrounding areas makes it difficult to predict the direction of the market. The challenge of finding an affordable home in close proximity to urban centers will continue.
Compared to the 25 largest urban areas in United States, Boston has the smallest percentage of land.
Boston Housing Boom Needs a Region-Level Response
Along with limited land, respondents to builder surveys cite rising input costs as adding to the difficulty of constructing entry level homes. The State of the Nations Housing 2018
Lack of Inventory in More Affordable Price Points
The real crunch in supply is for so-called starter homes — a home meant to be affordable, smaller in size — perfect for that first-time homeowner. But across the nation, builders are focusing much more of their efforts on high-end construction. In Boise, for example, 65 percent of homes for sale are on the upper end of the market. Thirty years ago, half of all homes on the market were smaller and less expensive, according to this year’s State of the Nation’s Housing Report from Harvard University. In 2017, that percentage had fallen to 22 percent, or less than a quarter. NPR.org
Given the housing boom in the Boston area, a change in the prevailing anti-urbanization and anti- development attitudes will support construction of more entry-level homes and fewer rental units. Careful attention to zoning laws and restrictions should be reviewed, keeping in mind the need for affordable (entry-level) housing and homeownership.
The bottom line is that we are seeing a stable market. Properties on the high end of the market will see more days on the market as we settle into a more balanced market. Due to lack of inventory, buyers will face challenges. With the counsel of a qualified real estate professional, you can achieve your goals of buying, or selling and buying.