The U.S. Federal Reserve Beige Book highlights an active Boston market
The U.S. Federal Reserve Beige Book recently reported new trends affecting the Greater Boston economy. In the First District, retail and manufacturing contacts report year-over-year sales or revenue gains, even though growth may be slower than what was record in the first two quarters of 2012. The Beige Book also notes that consulting and advertising firms are upbeat, and residential real estate contacts highlight an increase in sales and only a moderate change in median sale price.
In August 2012, year-over-year sales growth in both single-family homes and condominium markets were reported in the First District. The Beige Book cites low interest rates and affordable prices to the improvements seen in the marketplace, along with an impressive increase in residential rental costs.
While a slight decline in median sale price was seen in Greater Boston, the decrease was not unexpected by local real estate experts. The reason for the dip is a rise in demand, a decline in inventory levels and the uptick in low to mid-tier home closings. However, the declining inventory could discourage first time buyers, especially with a significant portion of newly purchased homes taking starter properties off of the current Hub real estate market.
According to a local real estate firm, the number of homes for sale in Boston is down significantly - down more than 20 percent over the past year. The most noticeable decline is among lower-priced homes, with inventory for the bottom tier down 21.4 percent year over year. The middle-tier category fell 20.3 percent from last year and high-end homes declined 19.1 percent in availability.
The inventory decline noticed in the Greater Boston area is higher than the national average, and overall the Hub experienced a 19.4 percent decline in listings year over year. The real estate environment in Boston mirrors what is seen across the nation, but it nevertheless keeps prospective homebuyers away from the marketplace.
The number of homes that went under agreement in September 2012 increased 26 percent year-over-year, and houses pending sales jumped 48 percent in the same time period. As fewer for-sale properties remain on the Boston marketplace, buyers will be forced to settle for homes they may not be interested in initially. This will inevitably cause contractors to build more properties, but the process will be slow, and first-time buyers may not have the patience to wait for new homes to come to the Hub.