Nationally, home sales are in a spring slump from war-induced interest rate hikes and consumer uncertainty, and it remains to be seen if Cambridge and Somerville are exempt from the broader trends despite its universities seeing millions of dollars in grants slashed, lab and office space sit empty and industry leaders such as Takeda lay off workers.
The proliferation of for-sale signs around the cities reflect nothing more than it being selling season, experts say. “Agents are suggesting to their clients to get houses out, because the weather is good and people are [going to] open houses,” said Manish Kumar, of Maven Realty. The local company, in Somerville’s Davis Square, was founded in 1984.
Historically, March and April are testing periods for sellers and activity doesn’t get defined until deeper into a May-June-July period when homes sell, he said.
Those signs, though, may be overlapping more than in years past. Inventory levels are not much higher than last year, but homes are taking longer to sell, said Holly Donaldson of Coldwell Banker Realty, a national firm that has offices in Cambridge’s Riverside neighborhood near Harvard Square.
Kumar agreed that sales are “maybe a little slower than years past.” But there has also been colder weather than usual in the past weeks, and Greater Boston tends to outpace the rest of the country in sales even if there is a short-term downturn.
That slowing absorption rate – how quickly the public absorbs inventory – is why homes around the cities are staying on the market longer.
Donaldson tells of a property listed on Cambridge’s tony Avon Hill. “We thought for sure we’d have multiple offers and it would be gone in the first five days. And that was not the case,” Donaldson said. The home went under agreement after around 15 days.
That’s a surprise for a single-family home in Cambridge where “if it’s priced well, it’s gone immediately,” Donaldson said. The same is pretty much true for Somerville, she said, but it was a home for sale on Willow Street in Somerville, just a couple of blocks north of Porter Square, with a rare sign indicating a reduced price. The single-family property has five bedrooms, three baths and four parking spaces, and took a price cut of $100,000 in early May to $1.45 million, according to Zillow. It’s been listed for 75 days.
A mix of data
In general, asking prices in Somerville and Cambridge are not down and “more fairly priced houses are actually moving,” Kumar said.
A message was left Saturday with the Willow Street listers. Neither Donaldson nor Kumar saw anything necessarily alarming about a reduction, where pricing may simply have been set too enthusiastically, perhaps based on “what we were getting last year,” as Donaldson said. “Due to world circumstances, everybody’s a little bit confused about what to do. When you add in that people have been waiting for interest rates to drop – which they are not going to; if anything, they may creep up again a little bit – everybody’s been in a little bit of a holding pattern.”
In a Coldwell Banker inventory from Jan. 1 to May 13 provided by Donaldson, the area had 43 homes for sale this year compared with 35 last year, a rise of 23 percent, and the overall list price was down 14 percent, to $4.3 million. But the average days on the market were basically the same: 58 days to a sale this year, compared with 59 last year. The number of units sold was identical at 26.
The average days on the market and to offer were both down, which is good – but approximate absorption rates were down 13 percent, meaning the approximate months of supply inventory were up: As of mid-May this year, there’s 4.7 months of inventory, compared with four months of inventory a year ago.
“So much uncertainty”
There’s “so much uncertainty,” Kumar said. “When people don’t have money at home, it makes it difficult for them to consume. It makes it difficult for them to stay in a good mood or stay positive. Housing is definitely going to take a big hit – what do you do, go buy a million-dollar house when you don’t know exactly what your expenses look like? Or do you buy it when you have a good understanding of what you can afford and can’t afford?”
“We’re being squeezed, right? We’re being squeezed with high interest rates, we’re being squeezed by the ability to guess how much a gallon of gas is going to cost,” Kumar said. “Deliveries throughout the whole world are slowed, and we don’t know what our availability of goods looks like 12 months out. We have to solve a lot of these natural issues to get some stability back into our market.”
Yes, home sales have been slower than years past, Kumar said – but it’s only a few weeks into the selling season, and he had cause for optimism.
The number of calls real estate agents get is a street-level way of finding out how the economy is doing, and that includes job creation, Kumar said. “The last few years, I feel like those numbers had dropped,” Kumar said. “I’m happy to say that so far this year, we’re seeing an uptick.”
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