Ligris + Associates Co-Managing Partner Nik Ligris and Lamacchia Realty’s Anthony Lamacchia Discuss the Ever-Changing Real Estate Market
The spring housing market is upon us – and while the consensus in the real estate industry was that it couldn’t get much worse than 2021, it appears that expectation has shifted. Nik Ligris sat down with Anthony Lamacchia, Broker/Owner and CEO of Lamacchia Realty, to get an industry expert’s opinion on what he predicts the spring market will look like for both buyers and sellers, and how they can best prepare for the constant changes happening within the real estate industry.
Nik: So much has been said about the spring market, and historically, this is always such a busy time of year. At a high level, what do you think buyers and sellers should expect from this spring real estate market, specifically in Metro Boston and Eastern Massachusetts?
Anthony: It’s undoubtedly a seller’s market, and it’s going to continue to be a seller’s market in strong fashion until summer – but then it will back off a little. By the time fall rolls around, I anticipate the market will cool off a bit. There’s no denying that it’s tough to be a buyer right now. The available inventory at any given moment is at an all-time low. If you visit our website, you can see that as of this interview, there are 2,200 single family homes for sale in all of Massachusetts. If you look at all the homes for sale – singles, multis, condos – there are about 4,500, and by historical standards, we’ve never seen anything like that.
Nik: I remember two years ago when you told me that we had less than 10,000 housing units in the market, that we had an inventory crisis. We’re less than half of that inventory today. Is this the new norm? What’s going to change?
Anthony: When the pandemic hit, everybody pulled back on listing homes for about 60 days – and that made the imbalance dramatically worse where we dropped below 10,000. One of the ways it will improve is by interest rates going up. Every time rates go up a half-point, the buyers have less power. So instead of having 40 to 50 offers per home this spring, we might have 30. And, I will say that I am starting to see very early signs of interest rates creeping up, and that increase is having a slight impact. I’m predicting that we’ll go back to pre-pandemic levels at some point in the fall of 2023 – and if I’m wrong, it will take another year before we normalize!
Additionally, the number of sellers listing homes has decreased – but it is not as dramatic as everybody thinks. There were many homes listed, but they were getting purchased very quickly. There is, however, a certain demographic of sellers who held back, and the highest concentration of those sellers were 60 or more years old with larger homes. Think about it this way – a person in their late twenties buys a small, single-family home. They then become what we refer to as a “move up buyer” – meaning they sell their home to buy a bigger home. Well, two years ago, the inventory for those bigger homes decreased dramatically and created a log jam in the market. It’s going to take at least another year to correct itself.
Nik: Do you see this in all segments of the market? Have you seen any trends or any neighborhoods, such as higher-income communities, that defy the bell curve?
Anthony: It’s been across the board – prices have gone up across the board and demand was up across the board. It may be too early to say this, and we’ll have to get further into spring to say for sure, but we may be seeing some signs of slowing in the lower end of the market. The first-time home buyer demand is decreasing the slightest bit – so slight that you’re not going to see a difference for a while, but I am seeing some tell-tale signs. This isn’t a big deal for everyone, but for a working-class, 26-year old buying a single-family home, it’s huge. That’s the impact interest rates can have.
Nik: How many agents do you have working for you at this point in time?
Nik: Since you cast a wide net, what trends are you seeing with buyers?
Anthony: Buyers that can afford second homes have gone into overdrive over the last two years. Rather than spending money on going to a resort, they’re buying houses in places they enjoy going to, such as Cape Cod, The Lakes Region of New Hampshire, Maine, and of course, Florida.
Nik: Is remote work having an impact on where people are buying?
Anthony: In 2021, people were much more brazen about buying homes farther from their workplace since they weren’t going into the office as often. As more and more companies announce the re-opening of their offices, I suspect that some of those people are going to need to sell and move closer to where they work and closer to the cities.
Nik: If I’m a seller today and I don’t have a place to go, is your advice still to get to market now when there’s less competition?
Anthony: If someone is selling and moving out of state, you should definitely list as soon as possible. The sooner in the year that you list, the more money you will make. February is the best month and March is the second-best month. But if they’re a sell-buy client that’s buying another home, they have to consider a couple of things. You can’t list your home unless you have some idea of where you’re going. There are clients who give us a wide price range and their list of top towns. We tell those clients to list their homes because we’re casting a wider net and more houses will be available. But when clients only want to buy a house on specific streets in a specific town, we recommend that they don’t list because we don’t want them to end up selling and having nowhere to live. So it depends on the client, but if they have leeway as far as spending or where they’re willing to live, it’s much easier.
Nik: What are some common mistakes that sellers or listing agents make?
Anthony: Overpricing. If something is worth between $800k-$850k, we’re listing at $799k. That’s something that a lot of sellers don’t understand. They think the more they list for, the more they’ll sell for, and that’s not the truth.
Nik: Let me challenge you on that – if I’m selling a house and there’s no competition, who defines what it’s worth? The market’s going to do what the market’s going to do – so if it’s worth between X and Z, why go with X and not Z?
Anthony: Because you’ll draw more people in and it drives the price up. We live in a society where people want to win, so if you price low, the next thing you know there’s a line of people down the street competing for your house. Our homes are selling for about three quarters of a percent more than our competitors, and that’s because of our marketing and our pricing.
Nik: Since a lot of our audience is from Eastern Massachusetts – what’s going on in Worcester and why is it different now?
Anthony: Worcester is the second-largest city in New England. It has medical, biotech, schools, and it’s more affordable. What we’re seeing is more and more people from the Eastern side of the state move there. I do think when the economy changes there will be some people that will move back, but it won’t be like it was 15 years ago when the market was bad and people moved back. Part of the reason for that is the housing correction that we’re going to see in three to five years will be nothing like the last one, in my opinion. It will be a slow down and an adjustment, but you’re not going to see prices fall off a cliff.
Nik: You recently expanded into south Florida – what’s going on in that market? Do they have an inventory crisis too?
Anthony: Everything that you’re seeing up here is worse down there. What Florida locals/buyers are dealing with are competing with other locals, plus a lot more people from out of state. If you sell up north and you buy down south, you have significantly more buying power than the average buyer in Florida because of home prices and economics. It’s definitely a hot market and we’re happy to be there. If anyone is looking to move to south Florida, they should absolutely call Ligris and Lamacchia.
Nik: In your experience, why is it important for buyers and sellers to hire a good real estate attorney?
Anthony: One of the biggest mistakes that I see home buyers and sellers make is they hire their family friend attorney. And this family friend attorney might be an estate attorney, an elder law attorney, or a litigation attorney. A real estate attorney is the only type of attorney you should hire when you are buying or selling real estate, because that’s what they do every day.
Some clients also get a little too cost-conscious, but it’s important to remember that they’re buying the largest purchase of their life. For some of these first-time buyers buying $600k homes, they’re spending an extra $1,500 to have an attorney properly review the purchase and sale of the deed, and all the documents at the closing. That’s incredibly valuable and worth spending the money on for peace of mind.
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