Promising signs for real estate market

PITTSFIELD — Numbers provide statistics, but they’re only part of the story when considering the big picture in any situation. Keep that in mind when looking at the performance of last year’s Berkshire real estate market.

The dollar volume of sales in the Berkshires was down 13 percent last year from 2021, according to the Multiple Listing Service, the primary source of Realtor-assisted sales data. The total number of sales declined 17 percent. The rapid pace that the local real estate market set in 2020 and 2021 definitely slowed. But the number of properties sold and the dollar volume transacted in the Berkshires in 2022 still greatly outpaced all years prior to the COVID-19 pandemic.

The total number of real estate transactions topped 2,388 in 2021, and sales dipped by 17 percent to 1,977 in 2022. But this sales pace is a historical high when compared to sales before 2020.

Nationally, Lawrence Yun, the chief economist and vice president of research for the National Association of Realtors, expects the market to bounce back in 2023.

“2022 may be remembered as a year of housing volatility,” Yun said. “But 2023 likely will become a year of long-lost normalcy returning to the market.”

With a total market volume now exceeding $773 million transacted in 2022, Berkshire real estate sales were still robust, despite falling from a record-breaking high of $891 million. Many factors impacted the local market, including low inventory, higher mortgage rates, inflation, talks of nationwide recession and overall, more cautious buyers than

2022 Berkshire residential real estate statistics

• Overall the residential market in Berkshire County declined by 10 percent over 2021 but dollar volume was only down by 5 percent.

• Strong sales in Pittsfield and outlying towns in the north and south helped cushion the market. The dollar volume transacted rose in Pittsfield by more than $16 million for a gain of 21 percent.

• In the north, Clarksburg, Florida and Savoy recorded gains. Besides Pittsfield, Hancock, Hinsdale, Peru, Richmond, Washington and Windsor had very stable sales.

• The sales pace in Alford, Becket, Egremont, Mount Washington, Sandisfield and Tyringham bolstered the South County market, while Lee and Lenox struggled the most.

2022 the previous year.

Looking ahead, Yun predicts that nationwide home sales will decline by 6.8 percent this year compared to 2022.

“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said.

Closing out December and going into January, the inventory of homes for sale in Berkshire County was down 19 percent compared to last year. Pending sales that are expected to close in the first quarter of 2023 are down by 46 percent and new listings coming on the market are down 23 percent. The median list prices are continuing to reflect increases, but the actual median sales prices are falling slightly.

The overall market will be challenging in the year ahead but now there are many hopeful influencing factors. Again, the 2022 Berkshire market is still historically unusual in the high dollar volume and the appreciation of our market and of our homes.

Industry experts believe that the Federal Reserve is signaling it will stop raising interest rates to help fight inflation. The National Association of Realtors is predicting that the 30-year fixed mortgage rate will fall below 6 percent this year. When this decline will take place varies, depending on the source. Fannie Mae is predicting the drop will occur during the first quarter of 2023. Yet, the Mortgage Bankers Association sees the decline happening in the second quarter, before it goes into the 4 percent range next year.

“As the mortgage market normalizes, it will be an opportunity for rates to decline even further,” Yun said.

Housing inventory is expected to remain tight in 2023, with new construction below historical averages due to persistent building material bottlenecks. In Berkshire County, after two years of rapid land sales, parcel sales stalled by 35 percent in 2022.

Adding to inventory pressures, it is projected that fewer homeowners will be willing to sell. Today, we have a twomonth supply of homes on the market, which is about one third of what we need to satisfy buyer demand in a balanced market. Many believe that homeowners are unlikely to trade in their 3 percent mortgage for a new home with a 7 percent loan unless they absolutely have to, so mobility of existing homeowners will remain slow.

The jobs market is a positive factor. More Americans are working today than at any other time in history. Nationally, 223,000 net new jobs were added in December, 4.5 million have been added in the past 12 months and 11.2 million have been added over the past two years. There have been 23.2 million new jobs added since the low point of the economic downturn in April 2020. Wage growth over the past 12 months was 4.6 percent.

Job additions are critical in generating fresh housing demand as mortgage rates stabilize. Housing affordability remains a challenge for those renters considering buying a home. Yun expects rent prices to rise 5 percent in 2023, following a 7 percent increase in 2022.

To view the full 2022 market watch report with historical, town-by-town data, go to BerkshireRealtors.net/marketwatch/.

Sandra J. Carroll is the chief executive officer of the Berkshire County Board of Realtors and the Berkshire County Multiple Listing Service.