Steve Medeiros, President of the Massachusetts Association of REALTORS® on the latest local real estate numbers
HOST:
All right, let's move on now we're talking about real estate. You just heard our conversation with Olivia Rockman. She was talking about this fresh July data. A housing starts across the nation are down 7%. We wanted to get a little more local with all this. So on the line now with us is Steve Medeiros. He is the President of the Massachusetts Association of REALTORS®. Steve, welcome back. Good to have you with us. I know you have some new data to talk about. But I was, I had a question off of our last conversation and I want your thoughts on this. There's an inventory problem not only in the housing, you know, the for-sale market, but also in the for rent market. Why hasn't the industry been able to solve this? And I'll give you an example, Netflix heard from its customers they wanted original content - well, they came up with it. We had a discussion yesterday about Gillette. People aren't shaving anymore. So guess what? Gillette now has products for your beard. They're adapting. What is the problem with the housing industry in not getting enough product out there for people who want it?
STEVE:
Yeah, that's a great question. We've been actually advocating for this for quite some time as a state association. One of the things that needs to happen in Massachusetts, we are behind in what we need for production, and it's going to take us a while to catch up. One of the great things we did was we worked with the Governor's office and the Legislature and we got the Housing Choice bill passed. And so that that's the start to it.
HOST:
Is that gonna make a difference though, Steve? I mean, are we seeing that already happening or is this, you know, down the road?
STEVE:
Yeah. So that's the start to it, and it's going to help and, you know, we have our government affairs office for the state association, who works with local communities to help them you know, get some of these things passed locally so they can adopt these practices that the state passed. But the key thing is, it takes time and then it takes developers time to find the properties they're going to buy now and then you know, go through that process and get it developed and then get you know, so they have to buy the land and develop it and then start building so so it is a long term solution. It's not going to solve the problem today. But that is kind of where we're at. The one good thing is if you looked at like the month supply of inventory, you know, in May we were at you know, point seven months. In June, we're at point nine months and now we're at 1.1 months so the inventory is increasing. People have been putting their homes on the market, so that is a good sign that it's going to help the market maybe calm down a little bit and not be so frenzy. So that's kind of what we’re hoping.
HOST:
Steve Medeiros is our guest, he's the President of the Massachusetts Association of REALTORS® taking a look at some of the July numbers. So Steve, with regards to the July numbers, it looks like single-family home sales statewide dipped 1.5% when you compare that back to 2019, but if you go deeper into the numbers here, you look at condominium sales are up 16.5% from July 2020. I kind of thought that's interesting because that sort of represents a psychological shift of the buyer because buyers were staying away from condominiums and condominiums were piling up with inventory and prices were dropping because nobody wanted to be close to anybody. But now all of a sudden the buyers are shifting back towards condos. How do you explain that?
STEVE:
So I think there's a couple of things that are happening there. One, is the people maybe who had not moved into the city yet they were you know, maybe it was something they planned to do it. There's a lot of job openings across the state and maybe they picked up a job and now they need to find a place to live and so they've picked up a place in the city or something like that. The other thing that tends to see is, you know, people often, when you're outside the Boston area, most people would like to have their own home and not necessarily be in a condo unless they're looking for the condo lifestyle, and so when people get to the point where maybe they can't afford a home and if their budget doesn't allow for that anymore, then sometimes will shift to the condo market and say okay, well I can't afford a single family home, but I can afford a condo and so that will then kind of spur the condo market.
HOST:
Steve Medeiros with us, Mass. Association of REALTORS®. Steve, square this out for me. So you got homes for sale in this fresh batch of data and it’s number of homes for sale year over year at 60% lower this year. And yet when you go to new listings for single family homes, the listings are up 70%. That doesn't make sense to me.
STEVE:
So keep in mind what was happening last July. We were just coming out of the pandemic coming out of you know, the shutdown and people still kind of not sure what was going to go on with, you know, the economy and the market and rates had come down a little bit they hadn't dropped yet. They really dropped down it was you know, August/September timeframe was when the real estate market really took off significantly. So I think that you're comparing a difference in time. So I think that's a little bit different. Also, we've had, you know, inventories come off and and it's coming back but it hasn't come back to where we were because our month supply of inventory in July of last year was, you know, double what it is right now. So, you know, we'll see as we continue on the rest of the year. My guess is that as we keep talking the rest of the year, you’re going to see those numbers get closer and the gap won't be as wide as we get into the fall and towards the winter, because the market that we had at that point is similar to what we have right now.
HOST:
Steve Medeiros is our guest. He is also a REALTOR® at Keller Williams in New Bedford and South Easton. Of course we're talking to him in this capacity as President of the Massachusetts Association of REALTORS® So Steve, these hit numbers they land on your desk. Here you are president of the statewide group. What numbers do you look at? What jumped out at you?
STEVE:
Well, what jumped out at me was even, you know, it was kind of surprising. We I looked at where we were last year, in July, you know, the percent of original price received was 99.1% and we're at 105%. So, even back then we were already getting offers at asking price for you know, now we're even getting the average is above what we're at, and so what that tells me is that people can afford it because they wouldn't be approved for a loan and properties wouldn't be appraising. So the market is still strong. I know there's been a lot of questions people asked, I get the question all the time. Is this a bubble? And, you know, when you talk to all the national economists, you know, they say the factors that played into the bubble back in 2008 of risky lending practices and things like that, those aren't in play right now and these are basically economically driven. So we wouldn't really see a bubble coming based on that. And that's a good thing. So the people out there who've been waiting and are not sure, if they're thinking about it, now's the time to do it while the rates are low. Because once rates go up, there's no guarantee they're going to be back down to these historic lows.
HOST:
Steve unpack that a little bit for us. You just talking about a percentage of 99 and then 105. And you're talking about what? The percentage of homes that are sold above asking? Is this what's going on?
STEVE:
So that is a percentage of the original price received. So if they listed their home at let’s say, (this is for round numbers) $100,000, then they got $99,000. Right? That’s where it was in July of last year, which is still a really strong number, like that's strong. And this year, they would have gotten above asking price at $105,000.
HOST:
So on average, most houses that are being sold now are being sold above what is being asked?
STEVE:
Yes.
HOST:
What does that say about the quality of the buyer? Is that is that the point you're trying to
make?
STEVE:
Yeah, what I'm saying is if people are out there and they're approved for a loan, you know, most people are looking, they look up to their max, so they're not going to make offers probably at their max. They may try to do that, but if they see something that's below their max they know that they can go up to their max and if they feel like the house is worth it, then they make that offer. Then it's up to the bank’s appraiser to come in and value the property based on other comparable sales, and with an increasing market that's been a good thing for the buyers and the sellers because the values have come in. So again, like any time, if people are going to be in these homes long-term they'll probably be fine and that won't be a factor at all when they go to sell.
HOST:
Well how are the banks reacting to that idea that you know, when somebody goes out to look for a house, they’re probably going to be asking above the list price. I mean, has this changed the loan process at all or how banks look at a prospective customer?
STEVE:
Yeah, I'm not sure how the banks are looking at it. I know the appraisers are just looking at what the comps are. Because what's happening is by the time, if you make an offer on a property today, there may be four or five other properties that are under agreement. By the time you go to close those have already closed and so they are your new comps. Your under agreements become you new comps. So that’s kind of where we’ve been and so we'll see if that stays steady through the rest of the year or if that starts to tail off a bit. I know when talking with our local presidents from around the state on a call we had last Friday, they basically said that they've been seeing a little bit of things stand on the market a little bit longer now, some price adjustments, which shows that the market is kind of coming back to a little bit of a normalization. We're not there yet because we're still only a month’s supply of inventory, but things are starting to normalize a little bit more than they were before.
HOST:
What's the average, very quickly, Steve, the average length of stay on the market now? Is it something like 20 odd days?
STEVE:
It’s 23 days and last year at the time it was 51. It's quick, if a property comes on, you can't wait, you gotta jump on it.
HOST:
You gotta jump, that's what you're telling your people. Steve Medeiros, always a pleasure. Thank you, sir. He's heading up the Massachusetts Association of REALTORS®.
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