Home News A Boston housing market standoff: Buyers vs. sellers vs. the Fed

A Boston housing market standoff: Buyers vs. sellers vs. the Fed

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Their perplexity is neither new nor exclusive to DINK. However, there are quite a few new players on the market.

As you may have heard, the Federal Reserve is trying to cool home prices.officials do not want Crash like 2007-2008but instead a more gradual reduction or “correction” is made— As Fed Chairman Jerome Powell recently said, — can “make supply and demand more in line so that home prices can rise at a reasonable level and at a reasonable pace so that people can buy homes again”.

Sounds good, but will it work?

The Fed has aggressively raised interest rates since March, Fixed for 30 years Mortgage rates hit highest level since 2007So far, prices have remained stubbornly high in most markets, including Boston, but the rise has slowed.

To 1 income-related indicatorSingle-family homes in Massachusetts aren’t the most affordable since 2004, according to Dawn Ruffiniowner of Wilbraham’s RE/Max Connections and president of the Massachusetts Real Estate Association.

Just think: The median price for a single-family home on Interstate 495 in August was $825,000, according to the Greater Boston Association of Realtors. (The median is the level at which half the houses are expensive and half are cheap.)

If the average interest rate for a 30-year fixed mortgage is about 6.7%, the principal and interest payments (assuming a 20% down payment) would be $4,260 per month.

A year ago the average price was $780,000 and the average mortgage rate was 2.9%. Monthly payments came to about $2,600.

The increase is $1,660 per month, or 64%. If you have savings, you can increase your down payment and lower your monthly payments. Or, you might end up in a smaller or less inconveniently located home than you would have liked. Alternatively, you can wait. Many people seem to do so.

Fewer single-family homes sold in the Boston metropolitan area in August than in any month since 2011, according to the Boston Metropolitan Area. latest dataHomes have been on the market for a little longer than they did in July, and buyers are paying a little less than the asking price.

A single-family home on Wall Street in Arlington, Massachusetts.
Susanne Kreiter/Glovestaff

“There aren’t that many buyers because we’re trying to find something we can buy,” he said. Melvin A. Vieira Jr.a real estate agent for the RE/Max Destiny office in Jamaica Plain and president of the Greater Boston Group of Realtors.

He’s talking about people like Kimberly Terry of Milton.Terry, 55, said he wanted to sell himself and the two of them as his parents moved into assisted living and the whole family shared and sold the house in which she grew up. looking for a new home for my daughter.

She was aiming to spend under $700,000, but had a pre-approved mortgage up to that price. Now, after interest rates on her mortgage have increased, she’s unsure about how much she’ll be able to pay, or what prices her lenders will approve.

“I’m not feeling well right now,” Terry said. After bidders failed to qualify for loans, she said, “we are seeing so many agreed-upon homes back on the market.”

Terry is still actively looking and hopes to find something before the end of the year.

“But it has to make sense,” she said.

Sellers are also trying to figure out what makes sense. Some have adjusted their asking prices. Some have pulled properties off the market or postponed listings until the situation is clear.

This creates a three-way conflict between buyers, sellers and the Fed.

The Federal Reserve is never the first to flash. Powell has vowed to raise interest rates until inflation subsides. This is a risky strategy. If the Fed overshoots, a recession is likely and the housing adjustment could roil.

When the last housing bubble burst, prices fell 26% nationwide from 2007 to 2011. S&P CoreLogic Case-Shiller DataIn Boston, however, the decline was half that, reflecting the resilience of the high-end economy and a lack of inventories.

What will happen this time? We have to wait and see.

And as any Tom Petty fan knows, that’s the hardest part.

Larry Edelman can be contacted at: [email protected]follow him on twitter @GlobeNewsEd.

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