MA condo supply: is it really only 1.8 months?

The Federal Reserve’s Beige Book report in July contained the following statement: “Massachusetts currently has only 1.8 months’ supply of condominiums available, compared with 6 to 7 months’ supply in a balanced market.”

Really? Wow. As I often point out, statistics are extremely useful if you know the context and can put the numbers into perspective. The above comment, however, does not explain the period being measured. As the months of supply figure is calculated by dividing the number of units currently for sale by sales in a given period, it is necessary to know what the given period is.

Look at the chart below. Note that sales are not uniform throughout the year in Massachusetts, because we have that thing called winter (the Federal Reserve’s report was prepared in Atlanta). It is, therefore, crucial to know whether the months of supply is based on sales at June’s pace or February’s.

Source: MLS, Oliver Reports

As the table below shows, the Federal Reserve’s report was based on sales in the month of June. Using monthly statistics in a market with large seasonal variations is misleading. Using February alone would be just as bad as using June alone.

Looking at the first half of the year, which will probably represent a little less than 50% of the year’s sales, supply  was about 3 months. Still tight, but not as bad as the Federal Reserve suggests.

Source: MLS, Oliver Reports

If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com.

Read Which broker should sell my house?

Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated

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