Is the seller’s market coming to an end?

A really interesting article from boston.com asks the question we’d all like to know the answer to: Is the sellers’ market coming to an end?

Witness for the prosecution
According to the President of the Greater Boston Association of Realtors, reporting that the median Single Family Home (SFH) price in Greater Boston had increased just 1.7% to $605,000 over the last 12 months, while the median condo price had slipped 4.1% to $549,000: “The seller’s market is likely over, or at least the balance has shifted. With sale prices having begun to stabilize, more homes and condos available for sale, and properties sitting on the market longer, home values have most likely peaked in many areas.”

Witness for the defence
According to a report from The Warren Group, in Massachusetts as a whole in September, the median SFH price rose 5 percent on a year-over-year basis to $399,000, but the real action was in the condo market, where the median price jumped 14.3% to $375,000.

Comment
Lies, damned lies and statistics was the first article I wrote for the Marblehead Reporter in 2008.The point I made then, and have repeated many times since, is that statistics can be distorted to suit the argument one is trying to make – rather like the way Opinion Polls slant questions to get the answer the sponsor wants.

In real estate I don’t believe there is an intent to mislead; I think it is often a writer quoting statistics without explaining them.

Having said that, the number one reason that I NEVER quote monthly statistics is that they can vary greatly and IMO are pretty meaningless.

Let’s look at Massachusetts sales to see if I can make my reason clear.

Our starting point is the comment that the median price in September (one month) increased 5% Year over Year (YOY) for SFHs and 14.3% for condos. We are using different sources for numbers (mine from MLS, Warren from public records, thereby including more sales) but the numbers for the month of September are quite similar. But look below at the monthly figures for July, August and September, followed by those for the entire quarter – Q3.

For SFHs the monthly increases are quite consistent.

But now look at condos. Note that I have high-lighted September 2018 when the median price was out of whack at just $340,085. The September 2019 median price was down from July and August but up sharply compared with September 2018 – which was an outlier.

So we look at the quarter – Q3 – and see that the median prices was up 3.2%, similar to the 2.8% for SFHs.

Confession time. I have statistics going back to 2000 for all 34 cities and towns in Essex County plus Essex and Middlesex Counties and Massachusetts. In all the years of keeping records the only time I have calculated a monthly statistic was – for this article.

Especially in New England, there is too much fluctuation even from quarter to quarter, in large part because of seasonality caused by….weather. To give another example, I worked with a seller in Watertown and he had a report from another Realtor showing that the median price had dropped  by a large amount – something like 20% – for ONE MONTH and suggesting that prices would show a decline in coming months. By showing longer-term data I was able to persuade the seller that the one month figure was meaningless – and in fact the median price increased by double digits in the second half of the year.

So how is the market?
What was long ago called the $64,000 question, when $64,000 still bought something of value.

By now you will understand that I like to use quarterly data and – better yet – Year to Date as we get to 6 and 9 months.

Here’s another table:

For both SFHs and Condos the YTD increase is =/- 2.5% – and in each case Q3 was a little higher than that figure, not suggesting a slowing of the rate of price increases.

But…..MA is a very big place! And numbers for condo median prices are distorted because Massachusetts includes….Boston. In fact, the median price of condos in Boston has dropped 3.1% YTD meaning that excluding Boston the median price has actually increased by 4.6%.

Yes, I know, your head is spinning with all these numbers. And I will add one more. Note that the median prices quoted at the beginning for Greater Boston were $605,000 for SFHs and $549,000 for condos. Compare that with $399,000 for SFHs and $375,000 for Condos in the Warren Group report. In both cases the Greater Boston numbers are about 50% higher than for the State as a whole. The Boston and surrounding towns effect.

Conclusion
As I said nobody is trying to mislead the consumer (or home buyer or seller), but I repeat what I often say to people when they are shown a statistic:”tell me what that means”.
Even if numbers confuse you (and as a numbers wonk that is hard for me to believe….) there is no reason not to ask for an explanation, as they say in prospectuses nowadays, “in plain English.”

For detailed Q3 reports on Marblehead, Swampscott, Salem and Beverly, as well as a town-by-town summary for the 34 cities and towns of Essex County, click
Team Harborside Market Reports.

Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®

Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
Andrew.Oliver@SothebysRealty.com

Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated