Is it smart to sit on your Boston home in today's real estate market?
Massachusetts has outperformed the national economy for years, local economist Michael Goodman says, and this trend is preventing many buyers from listing their homes for sale in Boston on the market.
Goodman is co-editor of MassBenchmarks, an influential journal that tracks the Bay State economy, and an associate professor and chairman of the public policy department at the University of Massachusetts Dartmouth. He says he believes sellers are encouraged to hold out for higher prices down the road because of positive economic outlooks, and this action is behind the decline in for-sale properties across the state.
According to a recent statewide report, the inventory of homes for sale across the Bay State fell 22 percent in August 2012 and has dropped seven out of the last 10 months. At the end of August, there was a seven-month supply of unsold homes, which is a drastic difference from August 2011, when there was approximately a year's worth of homes on the Massachusetts market.
"Press reports...are leading some buyers to believe if they hold their homes off the market until later, they will be able to get a better price," Goodman said in a statement, The Boston Globe reports. "You are starting to hear anecdotal stories of people fighting over properties."
What should you do while you wait?
While for many prospective home sellers, today is not the right time to buy, it may be the perfect time complete a few home improvement projects and increase the value of their properties. Renovation efforts often fall into three categories - energy efficiency, cosmetic upgrades and lifestyle alterations - and specific updates to the look and functionality of a property can generate a serious return on an investment in the future. However, sellers who want to part ways with their homes, but are holding out for greater deals, should have a time frame for how long they will sit on their properties. The fact is with global economic stimulants looking to put additional pressure on the United States, market values and demand can sway at a moment's notice.
Therefore, homeowners who plan to sell in the next one or two years should focus on smaller renovation efforts. Upgrades that will reduce utility bills, maintain the home's structure and add new bathrooms or bigger closets to a home can make a property more attractive to a potential buyer, with a relatively low investment on the part of the current owner.