After a strong two-year run of intense buyer demand, skyrocketing home prices and extremely low housing supply, it is anticipated that 2023 will bring a shift in the market toward more normalcy. The days of two percent rates and double-digit price appreciation have come to an end. The real estate market of 2022 was volatile locally, regionally and across the country. With the Fed charged with cooling inflation at the beginning of 2022, rate hikes began and increased throughout the year. Mortgage rates reached a high in November of 7.08%. With the rapid increase and climbing home prices, many buyers became uneasy with the market conditions during the second half of the year. This caused the housing market to cool at the end of the third quarter through the end of the year. This is a natural cycle of readjustment of a market. As we begin the new year, we are seeing signs that we have moved through the readjustment period are returning to normal paced market. The mortgage rate has started to drop from its high in November. With that brings comfort to buyers and we are seeing an uptick in buyer activity after a pause during the second half of 2022. The ongoing housing supply challenges will prevent home prices from dropping, though price appreciation will slow or remain flat in certain areas in 2023. The number of active homes on Cape Cod dropped by 33% year-over-year by the end of 2022, while new listings fell by 15% for the same time period. The low inventory continued to support the price growth of the median sold price, increasing 12% year-over-year to $639,000. Looking at the luxury market on Cape Cod, those homes priced over $2,000,000, there was an upward trend in inventory this past year. For 2022 there were 371 new listings compared to 2021 with 329, an increase of 13%. The luxury market tends to be the leader of the pack is a good indicator of what’s to come for the market as a whole. The Greater Boston area is the feeder market for Cape Cod and another area that’s important to watch as indicators help understand how the market will perform in the coming months. The Boston Proper market had an increase of 6% in active inventory at the close of 2022, as well as a 5% increase in the median price to $775,000. These trends held true for Cambridge, Somerville, the South Shore, and the South Coast with double digit increase in active inventory for all areas. As we move into the first quarter of 2023, there are promising signs that the pause in buyer activity has come to an end and that consumer confidence has been restored. As the mortgage market normalizes, it will be an opportunity for rates to further decline in the coming months. Chief Housing Economist, Lawrence Yun, predicts that the rate will settle to 5.7% by the end of 2023. This is goods news for the spring market for all areas of coastal Massachusetts. — 2 — E X E C U T I V E S U MM A R Y Emily Clark President, Berkshire Hathaway HomeServices Robert Paul Properties
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