Lack of inventory still a factor in local home sales

By Sandra J. Carroll

PITTSFIELD — A new year often brings answers to old problems. But one of the nagging issues that affected the Berkshire housing market in 2022 is still with us.

Lack of inventory continues to hamper Berkshire County’s residential real estate sales.

Sales dropped 30 percent across the Berkshires during the first quarter of 2023, the period between Jan. 1 and March 31, according to the Berkshire County Board of Realtors. The total number of transactions was 197 through the end of March, almost 90 shy of the 280 sales that took place during the same time period last year.

The Berkshire County Board of Realtors tracks only Realtor-assisted transactions.

As March ended, only 434 residential single-family homes were available for sale across the Berkshires. Available properties in the other residential categories coincide with that figure. Only 93 multifamily units, 324 land parcels, and 67 condominiums were on the market county-wide.

This significant lack of inventory of homes for sale continues to impact the sales market. This has kept it a very competitive buyer’s market, despite interest rate fluctuation and some economic uncertainty.

In the Berkshires, the total volume of dollars transacted plunged 38 percent during the first quarter compared to the first three months of 2022, from $123 million to $76 million. This resulted in a 9 percent decrease in the median sales price, from $303,000 last year to $275,000 in 2023.

The dollar volume is leveling out compared to pre-pandemic sales, but sales are still significantly lower due to the continued inventory issues. Many buyers who would otherwise move into a different type of housing — either up or down — are worried about finding adequate housing to move into if their current home is sold.

During March, we solicited feedback from area Realtors. Despite the lack of inventory, interest in residential real estate remains high. Forty seven percent of those that responded indicated that they saw an increase in calls from potential sellers, while just 26 percent saw seller activity decline. Most saw buyer activity increasing — 58 percent reported a spike in new buyer clients. Thirty two percent said their buyer client base remains stable.

When we asked Berkshire Realtors about their overall confidence in the market over the next three months, 58 percent said they expect an improving market with more listing and buyer activity as spring gets underway. Traditionally, spring is the most robust market for real estate sales in Berkshire County. But the board found during the pandemic years that sales can be consistent year-round.

Nationally, real estate analysts are also predicting good things for the second quarter. The period between April 1 and June 30 is the year’s most active three-month cycle for listings, buyer interest and home sales, according to Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors.

“Two of the busiest selling months are May and June, with June typically the peak month of the year,” Evangelou said.

Overall, Realtors believe that we’re returning to a more stable market after several years of unsustainable growth.

They still see properties going under contract right away and are still experiencing multiple offer situations, but only for homes that are in traditionally popular price ranges and realistic asking prices.

Efforts to create new housing, incentivize local regulations that would increase habitable space and create sensible zoning laws to help the housing crunch are critical for the short and long term health of our community, both in homeownership and in rental availability.

We talk a lot about the lack of workforce housing in Berkshire County, but here’s an interesting note. Many of our buyers express concerns about local regulations regarding short term rentals and accessory dwelling units. While there is confidence in purchasing real estate when paying a premium there is a desire to ensure the investment is good in the long run.

Pending home sales grew in February for the third consecutive month nationwide, but year-over-year sales are still lower than they were in 2022, according to data from the National Association of Realtors. Lawrence Yun, NAR’s chief economist, said that pending contracts have turned the corner and will continue trending upwards.

“Mortgage rates have improved in recent weeks after the federal government guaranteed the status of most mortgages amidst uncertainty in the financial market,” Yun said. “While access to commercial mortgage loans could become increasingly difficult, residential mortgage loans are expected to be more readily available.”

Hopes for a vibrant spring market are also tinged with both hesitation and concern about the stability in the banking industry

If issues in the banking sector persist, “mortgage rates will likely drop faster than expected,” Evangelou said. “I see the average rate on a 30-year fixed mortgage to be around 6.2 percent this quarter.” (As of mid-April, the rate for a 30-year fixed mortgage was 6.8 percent).

But the lack of available housing stock still looms large.

“Over the last several weeks, declining rates have brought borrowers back to the market but as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers,” Sam Khater, Freddie Mac’s chief economist, said.

Decreasing mortgage rates are a good sign for a potentially active spring market and will ramp up an already hyper competitive marketplace. But lack of inventory is still with us and will continue to remain a nagging concern.