Will our local real estate market crash?

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Here are the top reasons that this is not the same market we experienced in 2008. What has changed now? What can we expect for the rest of the year and what are we seeing right now?

WHAT is different about 2023 vs 2008?

1. Our inventory is incredibly low
2. Lending laws and qualifications have drastically changed to protect the consumer
3. The job market in Boston is strong, we have many job sectors that are growing
4. On an annual basis mortgage delinquencies continued to decline last month
5. According to CoreLogic, our negative equity (NATIONALLY) is at 1.9%. During the last quarter of 2009, negative equity peaked at 26% of mortgaged residential properties.

Does a national recession mean lower prices?

In 2008, there was a perfect storm of home buyers receiving loans that they really could not have qualified for. They were buying homes with no money down, stated and not verified income and rolling items like closing costs and new furnishings into their loan to be able to purchase these expensive homes. Then, you had homeowner trying to sell a home they could no longer afford. When the value of a home is less than what the seller owes the bank, then that buyer can attempt to facilitate a short sale with the bank. In our current market, there is a VERY slim chance that a homeowner doesn’t have any value in their home. At the rate the homes have appreciated over the past few years the majority of homeowners now have equity in their home.

This graph shows the growth in home value since 2019 for single family homes in both the Melrose and Wakefield markets:

*if you would like to view this information for a different town, please don’t hesitate to reach out to me.

What do we expect for the rest of 2023?

We’ll start to see more of a balance return to the market. This past fall the rates were rising steadily and it did sideline many home buyers. Historically, our spring market is always our busiest and the time over the holidays is slow. In the months ahead we’ll see a return of buyers to the market, but will also likely see fewer bidding wars - especially in certain price points. Every neighborhood is different, so in some neighborhoods some price points will move a lot faster than others: ie. Wakefield: Under 1.2M Melrose Under 1.5M.

What are we seeing now?

Buyers have lost a bit of their buying power as rates have increased. Someone who could purchase a home last year in the 1.5M range, might now be looking closer to 1.1M this year. There are many types of options available to buyers that can help to counteract the higher rates - such as grants, lower downpayment options, or a 2:1 rate buy down options. Inventory is low, but historically on trend. While a burst of new inventory in all price points would be welcome it is unlikely. Home sellers either previously made the move over the pandemic when rates were low, they don’t want to forfeit the nice mortgage they have now, and they also likely can’t find anything else to buy.

What should you do if you’re looking to purchase a home this year? I’m happy to have a call (of course, at no obligation) to talk you through your options. Figure out a budget, what are you comfortable spending each month on just your mortgage alone? This wouldn’t include items such as: utilities, a homeowners association fee, water, sewer, landscaping, etc. Then connect with a local lender is the next best step to see what you can qualify for. I’m also happy to introduce you to a number of fantastic lenders in our area. Using someone small and local is always suggested!

I am always happy to answer any questions you have about home buying or selling in our market. Please consider me a resource and reach out through: www.SamanthaBoston.com

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Samantha Jason Lehman is a full-time Realtor at William Raveis Real Estate, the largest family owned real estate brokerage in New England and the member of Leading Real Estate Companies of the World. Samantha has been representing buyers, sellers, developers, and investors throughout the Greater Boston market for over 15 years. In that time she has closed over 125++ Million in residential sales ranging from small condominiums, luxury lofts, single-family homes, historic homes and mixed-use developments. She resides in Wakefield with her husband, their two children, and two pups. Learn more: SamanthaBoston.com

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