Homeownership & the American Dream

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By William P. O’Donnell, Norfolk Register of Deeds

According to a recent real estate trade publication, the most popular reason people gave for buying a home was their desire to own it. Now that may not sound like rocket science, but just think for a second about what’s behind that statement.

After all, homeowners want to establish their independence. They want to lay down their family roots. They want to build equity. And no group longs more for those dreams than first-time homebuyers.

The real estate market is doing fine if you are a seller, but not so well if you are a buyer. It’s the classic case of supply and demand. “It’s crazy out there,” said one Boston metro real estate broker. She was quoted in an excellent article titled the “Improbable Dream” where her clients, aspiring first-time homeowners, made a bid on a $500,000 home that came on the market on a Saturday and by Tuesday there were already 25 other bidders.

Now that may be just one anecdote, but here’s some compelling data to back it up: In the Boston metro area, only 27.6 percent of young adults own homes, compared to 37 percent across the country. “First-time homebuyers are finding themselves squeezed out of the Massachusetts market and now make up the smallest share of the market since at least 2003,” opined an article published by MASS Live.

In securing a piece of the American Dream there appears to be two major hindrances for potential first-time homeowners: housing prices and limited inventory.

Real estate prices in Massachusetts are some of the nation’s highest. For example, the Massachusetts Association of Realtors (MAR) noted that in March of 2019 the median price for a single-family house put under agreement was $390,000 and the median price for a condominium put under agreement was $375,000. It’s no wonder that a survey conducted of Massachusetts homebuyers noted that their biggest obstacle to buying a home is the down payment.

According to a recent article in Boston Magazine, the reason that Massachusetts real estate prices are so high is that “there aren’t enough houses for sale across the state to meet the demands of buyers, leading to a spike in housing costs.” The group noted that housing sales were down 9.5 percent last February compared to February 2017. MAR’s past president, Rita Coffey, noted that first-time buyers “can’t get a foot in the door without a solid inventory of affordable starter homes.”

The Massachusetts Realtors Association noted that 84 of the last 85 months saw year-over-year inventory decreases. So what’s causing lower inventory levels? You just might be surprised to know that many “baby boomers” that are in their 60s and 70s are staying in their homes. It’s called “aging out.”

While this group is living healthier and longer lives, some may consider moving to a one-floor house to meet their physical and space needs. MRA President Anne Meczywor stated, “As our population ages, it makes sense that the desire for houses that allow people to age in place is also increasing.” A national report noted that 1.6 million older homeowners account for the 2.5 million houses held back from the market through 2018.

So is there hope for the first-time home buyer? The answer is a resounding yes! The Massachusetts consumer confidence real estate index remains strong. The market appears to be stabilizing with interest rates holding at around 4 percent. In March, there was a 15 percent increase in the number of single-family homes put under agreement and a 9 percent increase in condominiums put under agreement compared to this time last year.

Additionally, young people are resilient when it comes to buying a home, especially in this state. First-time home buyers comprised 40 percent of the market, compared to 33 percent nationwide in 2018.

And finally there’s one indisputable reason that first-time homebuyers will succeed: because there is no place like home, especially when you own it!

Around the Real Estate Block: Canton property sales totaled 40 for March 2019. The average property sale price (including residential and commercial) for March was $1,048,729. There were 29 Homestead filings and 0 foreclosure deeds filed against Canton properties for the month of March.

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