Another year is behind us, and what a year it was! While 2017 and beyond promise to be eventful in myriad ways, it probably makes sense to focus solely on what’s ahead in the world of condominiums, cooperatives and homeowners associations for the moment. In an effort to ascertain what we can look forward to, we reached out to various real estate professionals in the New England region and asked them what they felt to be the definitive moments of the last year, how those moments will reverberate in the year ahead, and what else associations should be looking out for as they manage the day-to-day operations of their communities.
A Trip to the Market
Most industry professionals remember the famous recession of 2008. Sadly, the housing market is not entirely out of the weeds yet, but recovery has been happening slowly and surely, and people are again looking to buy homes. 2017 surely looks to be a major transition year, and it’s quite likely that the housing market will not be unaffected by those ripples of change.
“Demand for real estate continues to be very high,” says Eric D. Berman, director of communications with the Massachusetts Association of REALTORS®. “Unfortunately, inventory is at or near record lows. Our most recent data set available for analysis is from October, and indicates that inventory of condos has been down 11 out of the last 12 months, and 71 out of the last 72 months, assuming I have counted correctly. Prices continue to go up because of this true supply-and-demand market. In July, the median price for a condo in Massachusetts hit an all-time high of $358,950. Sales are going down, not because of lack of demand, but simply because there are so few homes to purchase.”
Berman also posits that an uptick in interest rates will only cause demand to increase. “If those rates go up more than a point, that’s when we’ll see affordability go down, as that’s when interest starts to impact what a buyer can afford. This could help push prices down, and it certainly favors cash buyers. We look at data in the aggregate; therefore, I cannot speak about specific residential projects. In general, brokers are encouraging their buyer clients to make sure that they’re pre-approved for a mortgage. But lending continues to be tighter than we’d like; there are good buyers with good credit and good jobs who are having trouble receiving financing.”
All this points to an eventual need for increased availability of condos to meet the demands of the market. “And that supply has to come from other places than sellers just putting their homes for sale,” notes Berman. “We need new production. We need people to either move in with family or move away from Massachusetts, specifically, and we need investors to make decisions to sell units that they’re currently renting to homeowners. It is admittedly very difficult to build in Massachusetts.”