As we approach the close of 2023, the Boston housing market is poised for a potential winter correction. With the 30-year mortgage rate inching towards an 8% mark, surpassing the net CAP rate of many residential properties, a shift is palpable. Buyers are becoming more hesitant, leading to an uptick in available inventory — signs are pointing to a winter flash correction. For those considering a market entry this winter in search of real estate deals, the question arises: where are the best opportunities, and how can one be prepared to seize them?
Before we delve into the specifics, it’s crucial to explain the overarching trends predicted for the Massachusetts housing market by Geohome. This overall trend will help you determine the value of embarking on a property search or, dedicating your time to further reading. Despite the potential for interest rates to inch down in the near future, a sharp increase in housing prices remains unlikely due to the historically least affordable housing market and the typical economic softness that accompanies a rate pivot. Concurrently, the chances of a significant downturn in the Boston housing market are slim. Geohome anticipates a market characterized by regional differentiation — some areas may see a surge in growth as they play catch-up, while others might experience a cooling off from post-pandemic highs. In terms of timing, housing prices are expected to hold steady, with normal seasonal shifts. Over the next two to three years, it’s less likely that the overall housing price index will dip below the levels seen in the winter of 2022.
The data and analysis that leads to this conclusion will be detailed in forthcoming articles, so stay tuned for further insights.
With a flash correction in Massachusetts’ housing prices anticipated this winter, Geohome has been analyzing where a more significant downturn might occur, presenting opportunities to buy low.
Our market observation hinges on the percentage of listings with price reductions. The latest data from September 2023 for Massachusetts’ listed properties is telling. The initial analysis focuses on the percentage of listings with price reductions, excluding zip codes with fewer than 10 listings due to insufficient data.
Boston Metro Percentage of Listings with Price Reductions
The table below showcases the top 10 zip codes with the highest percentage of listings with price reductions. If you’re aiming to purchase a property in these locales this winter, your chances of a deep lowball offer being accepted are notably higher.
These 10 zip codes appear resilient to the rising interest rates and do not exhibit a need for deep price cuts to facilitate sales.
Having pinpointed where the greater opportunities for bargains lie, the next step is to understand how to effectively secure these deals. Here are some strategic recommendations:
The chart below compares the negotiation abilities of top brokers in the Brookline area with their peers, focusing on the ratio of transaction prices to listing prices.
From April 1, 2022, to September 30, 2023, a total of 1,109 buyer agents facilitated transactions in Brookline, averaging fewer than two deals per agent. Geohome, with stringent criteria for transaction volume and key performance indicators like negotiation ability (measured by the adjusted sale to listing price percentage), has identified the best-performing agents. These agents rank in the top 2% of their profession, a standard more selective than the admission rates of Ivy League institutions (5%).
Data indicates that top agents can negotiate down approximately 2.7% off the house price for their clients than their peers. During the market panic period, they can secure even greater discounts. For instance, at the onset of the COVID-19 pandemic in the U.S., these agents negotiated an additional 5.6% off for their clients, on top of the general market negotiation down percentage. In the first quarter of 2023, during the flash crash in the MA housing market, their ability to secure additional discounts peaked at 4.6%. Notably, a buyer’s agent’s commission typically ranges from 2% to 2.5% of the house price, meaning the savings they provide can significantly outweigh their fees. Their extensive experience and specialization in specific areas provide extra value for clients to avoid potential risks, which cannot be measured in numbers.
The following chart compares the negotiation abilities of top agents in the Wellesley area with all other agents. From this chart, we observe that during the early stages of the pandemic, top agents saved their clients an impressive 5.1% off the house price. During last winter’s flash crash, they managed to negotiate an additional 3.4% discount. Currently, as Wellesley’s housing market, particularly for high-end single-family homes, shows signs of slowing, the value of these top agents is increasingly evident — with savings of 6.6% in the second quarter of 2023 and 5.6% in the third quarter.
If you plan to buy a house this winter, please contact us at contact@geohomeus.com .
With solid transaction data analysis, we will find you an agent who can identify/avoid risk, save money, and get the dream house for the client. Armed with robust data analysis, we will connect you with an agent who can identify and mitigate risk, maximize savings, and help you secure your ideal home.
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