Is The Real Estate Market Too Tight?

re-market-tightYou have probably heard about the dearth of residential real estate listings in the Boston area. So how tight is it and does it even matter?

It is in fact very tight from an historical perspective. However, my interpretation of the data is that inventory has been falling for a while, and has gradually reached a point where people are noticing that there is so little for sale. The following is a recent snapshot of 3 different areas that represent a good cross section of the entire Boston area. [all data is directly from MLS].

All Brookline Residential Properties for Sale:
March 30, 2015: 64
1 Year ago:           99
2 Years ago:        94
3 Years ago:       201
4 Years ago:       249
10 Years ago:      177

Downtown Boston (Back Bay, South End, Beacon Hill, South Boston, Midtown, Waterfront, Leather District) Residential Properties for Sale:
March 30, 2015: 287
1 Year ago:          299
2 Years ago:       304
3 Years ago:       682
4 Years ago:     1028
10 Years ago:    683
Note: Many of the new ultra-luxury high rise units coming on the market are sometimes not reflected in MLS and that can distort this data.

March 30, 2015: 131
1 Year ago:           150
2 Years ago:        138
3 Years ago:        279
4 Years ago:        311
10 Years ago:      297

Clearly, inventory has been shrinking the last few years and is substantially down since 2011, and from the numbers 10 years ago. I don’t think there is anything alarming or “bad” about this situation. It is merely how the market is different than it has been. When there is too much inventory or the market is slow, the popular news focuses on all the heartache associated with homeowners not being able to sell their homes. Now, the popular news focuses on all the heartache associated with bidding wars (see The Boston Globe, Low Inventory + Low Price=Bidding War, March 31, 2015 p.1) and notes that agents have begun to price properties low to promote bidding wars. I think the Globe is correct about the facts, although they emphasize the negative effects on the folks who are on the short end of the stick this time around. The bottom line is that it is a good time to be a seller rather than a buyer.