Buyers caught in the middle

The Massachusetts Association of Realtors announced that in August 2014, for the seventh straight month in a row, sales dropped and prices rose—leaving buyers caught in the middle. Sales are down in large part because the inventory just isn’t there, while that good ol’ law of supply and demand means that sellers are keeping prices high because they know they have a scarce commodity on their hands.

While the Massachusetts Association of Realtors stats measure statewide activity, if you’re a buyer in Boston, you know that the situation is even worse in Beantown itself. Boston Realtors are keenly aware that times are tough for buyers. To help you understand, here’s an explanation about some real estate lingo.

We have something in the industry called an “absorption rate.” This is the rate at which homes are sold in a specific market, such as Boston. The absorption rate is calculated by dividing the number of homes available by the number of sales for a given period. The idea is that, at a certain rate, all of the houses will be “absorbed” (or taken off the market, usually through sales) within a given time frame. If all the homes sell too fast, and enough additional homes aren’t added to the market, it’s also the amount of time before which there will literally be no homes available for buyers.

Now, that doesn’t ever happen, especially in big cities; there are always homes available. This is because there is always an ebb and flow of people coming and going from a large metropolitan area. But even an absorption rate of two-months can be awfully hard on buyers, because the industry standard states that a supply of three months’ worth of homes for sale is a balanced market. And the absorption rate for Boston, as of the end of August, is 1.45 months. With so few listings available, it’s not surprising that buyers are having trouble.

So what’s a frustrated buyer to do? For one thing, enlist professional assistance. We eat, sleep and breathe market reports, so we know exactly what’s going on, where the scarce homes are to be found, and we can help you be first in line to snap up the Boston home of your dreams. Contact us today to learn more.

Posted by Michael Sylvia on
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