New Year, New Market?
2023 was a dead year in real estate on Massachusetts' South Shore. Record low inventory and an incredible spike in the 30-year fixed mortgage rate led to a virtual standstill in transactions as well as prices. If anything, it was a testament to the continued resilience of the metro Boston housing market, and if you own in this area or will someday own in this area, you have a lot to look forward to.
What’s 2024 shaping up to be for the South Shore real estate market? Well, if I could predict the future, I’d be day trading stocks. That said, there are a few interesting trends to watch.
While inventory data for December/January has not yet been released (Starbucks on me if you can find me a good source), the 30-year mortgage rate does seem to be on its way down.
The above graph shows the change in interest rates from July 2021 (the last of ‘the good ole days’) to January 2024. Rates spiked at 7.79% in late October, and are now sitting at 6.6%.
Interest rates, and the societal consensus on whether they are going up or down, are the biggest driver of the United States economy, and therefore the world economy, by far. They are also the biggest driver of the real estate market.
Not too long ago, every well priced open house had a line down the block filled with buyers who would stop at nothing to lock in a rate in the 3s. Fast forward to the rash increase in rates, and their peak in October 2023, the demand fell off a cliff. Thankfully, the sellers fell off a cliff too, because no one wanted to sell and then have to buy at the high rates.
Now that rates come down, and that the consensus is that they are going to continue coming down, buyers are starting to come out of the woodwork again.
The Prediction for South Shore Real Estate
My prediction for the South Shore in 2024 is that we will start to see an uptick in inventory and an increase in transaction volume. How will this affect prices? Well, it all comes back to supply and demand.
As rates decrease, it will draw more buyers out to the market. I'm old enough to remember what life was like in 2021 when everyone and their mother wanted to buy a home on the South Shore. I don't think we'll get to that level, but it will be more like that than it is like today.
Decreasing rates will also draw more sellers out to the party, as they'll be able to sell, then buy, with confidence.
All of this will continue in the context of limited new housing inventory on the South Shore. Until there are major changes in zoning codes or decreases in construction costs, expect this to be more of the same.
For all of these reasons, I suspect prices of South Shore real estate will hit the resume button on their upward trajectory.
Are you interested in purchasing or selling a home on the South Shore? Remember, the right agent can save you thousands!
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