Charlestown Q3 Update
We’ve all been watching the property market soar and home values appreciate at a record pace across the country.
The global pandemic has been a whirlwind across the world and has led to countries and financial institutions adapting to support their economies. Last year, despite being plunged into the first recession since the Global Financial Crisis, home values across the country rose, including here in Charlestown, Massachusetts. CoreLogic announced that US homeowners with mortgages have seen their home equity increase by nearly $2.9 trillion since the second quarter of 2020 (https://www.corelogic.com/intelligence/homeowner-equity-insights/). That’s an unheard of 29.3% year over year.
In line with national trends, the Charlestown housing market has seen impressive growth throughout 2021, but conditions did start to make some shifts in Q3.
Low Inventory, High Demand
Record low interest rates coupled with stimulus packages has pumped funds into the market. This created the perfect recipe for new buyers to enter the market, however, supply hasn’t been able to match demand, thus further contributing to sales prices rising. Inventory in Q3 2021 has been lower than Q3 and Q4 2020. These low inventory levels have really created a sizzling hot seller’s market. New construction would be a welcomed addition to ease the burden on demand.
In Charlestown, the median price for a single-family home was $1,205,000 over the summer, which equates to a 7 percent year on year gain. 50 percent of homes listed were sold in less than two weeks, although, some of the less desirable properties took a little longer to go under offer. While the rising prices were welcomed by sellers, many buyers have been priced out of the market and are now taking a step back to reassess.
Low Interest Rates – How Long Will They Stick Around?
Another contributor to rising prices has been the record low interest rates; many buyers have been able to get mortgages at sub 3%, but this is changing. Last month, average interest rates in the US rose from 3.03% to 3.10%. This is just a small jump, but it is an indicator of where rates are headed.
The Federal Reserve recently announced that they are looking to curb inflation, and this is going to directly affect mortgage interest rates. Part of these measures includes pulling back on their mortgage bond-buying program, which has been in place since the start of the pandemic. Given that the economic recovery has been stable, there has also been talk of the Fed could hike interest rates earlier than their planned 2022 date.
Where Are We Headed?
As we move towards the holiday season, there have been some slight signs that the market is cooling. While demand remains strong, houses are starting to sit on the market longer than they had been and price growth has plateaued. On a whole, we expect home prices to continue to rise, albeit at a much slower rate.
If you’re considering listing your property for sale, we recommend getting in before the end of the year. We are still in the midst of a seller’s market, but a rise in interest rates could likely lower demand and achievable sale prices. Request a free home valuation here.
If you have any questions about Charlestown real estate market conditions, contact Remmes & Company today. We're happy to share our local expertise with you.