Inventory has fallen in 69 of the past 70 months throughout the state, with only 2.5 months of supply as of November, according to MAR. In greater Boston, active listings dropped 3.4 percent in October versus the same month the previous year, with supply levels at 1.3 months.
In this regard, the tax bill might actually help Boston’s supply woes. With fewer tax benefits for homebuying — plus an increased interest rate — demand for homes will likely drop. It likely won’t be enough to bring demand in equilibrium with supply, but any relief will do.
“That will even the playing field a little bit,” Presti said of the the tax bill and interest rates. “That’s not a bad thing for real estate. We’d like a balanced market. But we’d like the supply to increase so it creates an even playing field between buyers and sellers.”
There is no quick solution to the problem. Building upwards is one way to provide more housing, and though some new high-rise building is already underway, it’s an expensive and timely undertaking.
“There is so much being built in Boston,” Wilk said. “People have taken to that idea of building up Boston. They’re either converting apartment buildings to condos, or they’re tearing down what used to be five units and low rises and turning them into mid rises or high rises. The problem is the cost of these newly built condos. It’s so difficult to afford that.”
Help may be on the way for those who can’t afford much of the new construction. Massachusetts Gov. Charlie Baker in December allocated more than $20 million in subsidy funds and $15 million in low-income housing tax credits to aid his pledge to build 135,000 new housing units by 2025. Coupled with other policies — like a gubernatorial proposal to allow local zoning variances to pass with a simple majority instead of the current two-thirds majority — could mean that inventory levels will actually rebound in 2018.
“I do think we can see an impact starting in 2018 based on this legislative agenda,” Presti said. “It’s a good way to address development and lack of affordable housing.”
Energy scoring
Of the few regulatory proposals that would impact real estate, perhaps none is more controversial than mandatory energy inspections. The Massachusetts Senate-House Conference Committee considered adding to its energy diversity bill a clause that would require homeowners to conduct an energy inspection of their home before a sale is closed. That would be on top of the home inspections required of any deal, according to MAR.
After fierce lobbying from real estate groups, the provision was kept from the bill, but the proposal is not entirely dead. Real estate experts said they share the state’s commitment to energy efficiency but that the proposal would place an undue burden on homeowners, many of who own very old homes in and around Boston.