In the early part of 2021, it was predicted that the pandemic was bringing would-be future buyers forward who would be purchasing sooner than they originally planned. We are starting to see the backside of this as we close out the third quarter of 2022. The high prices, limited inventory and mortgage rates crossing the 6 percent threshold have finally started to soften buyer demand perhaps signaling the start of a long-elusive shift toward a “normal” market. Two percent rates and double-digit price appreciation cannot last forever. In fact, the longer it goes on, the unhealthier the market and a formula for a housing crash, not just a cooling period. This time of year, we tend to experience a slowdown in activity as winter approaches often impacting pricing. However, given the tight inventory levels, I do not expect this to be the case. Across the country, strong vacation rental markets, such as Cape Cod, have seen significant price appreciation and resilience of price growth because of the extremely low inventory levels. The inventory level in Barnstable County is down 16% from this time last year. This has pushed the median sold price up 14% to $650,000. The Cape Cod market may be the anomaly to the traditional fourth quarter slow down. The luxury market may provide us with some insight of what’s on the horizon for the overall housing market. For homes priced over $2 million in Barnstable County, the median sold price has dropped by 7% year over year, while the new listings have increased 5% across the Cape. This indicates that we are experiencing a softening of buyer demand that is impacting pricing and inventory levels. While there has been no change in active listings year-over-year, if this trend of more new listings and less buyer demand continues, it will help the active inventory levels to increase, providing more options for buyers in the market. The Boston Proper market is proving its strength with continued low inventory and increasing median sales price. The median price of a home sold in Boston in the third quarter topped $785,000, up 7 percent from the previous time last year. For Barnstable County, the absorption rate, the rate at which available homes are sold during a specific period, has been steadily increasing each month since the first quarter of 2022. For September, the rate was 1.98 months, compared to its lowest point of .91 months in March. For Suffolk County, the absorption rate for single family homes has increased from .83 months in the first quarter of 2022 to 1.67 in the third quarter. The rate for condos in the Boston market has also increased from 1.53 months to 2.52 months for the same period. The rate for single family homes in Bristol County has increased 32% year-over-year from 1.05 months’ supply to 1.39 months. Finally, the South Shore has risen 59% from .96 months to 1.53 YOY. As you can see, this trend is across the board for all regions of Southeastern Massachusetts and another promising sign for a shift in the market. We are still closely monitoring the actions of the Fed and how it will impact the housing market nationally and here at home. The central bank has raised rates five times since the beginning of the year to squash inflation. The last three hikes have been rapid, and we are still waiting on signs that these increases are having a significant impact on curbing inflation. There are two remaining meetings this year where it is expected that the Fed will make additional increases. Based on the latest projections it is expected that the increases will be another 100 to 125 basis points by the end of the year. Given all the factors at play in today’s crazy real estate market, there is no indication that there will be a major real estate crash in the Massachusetts region. Our area tends to fair well during economic uncertainly due to a strong job market in the medical and tech fields in Boston and surrounding areas, outstanding educational opportunities and the allure of the coastline from the South Shore to the South Coast and over the bridge on Cape Cod. — 2 — E X E C U T I V E S U M M A R Y Emily Clark President, Berkshire Hathaway HomeServices Robert Paul Properties
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