In 2022, Berkshire real estate sales slowed from the peak of pandemic buying and the 2023 market continued that decrease. The dollar volume of all properties transacted retracted to 2019 levels, and the number of properties sold fell to 2016 lows. Reports by area REALTORS show that while the market has cooled from the frenzied pace, the lack of inventory is taking a toll on the sales rates. The total number of all real estate transactions topped 2,388 in 2021, and this year sales dipped to 1,651 county-wide. With a total market volume of $692 million dollars transacted in 2023, this is down from a record breaking high of $892 million dollars sold in 2021. Many factors are impacting the market, including low inventory, higher mortgage rates, inflation, talks of nationwide recession and overall, more cautious buyers than the previous year.
It’s important to drill down in the numbers, as some towns have continued a steady pace while others stalled. For example, the middle Berkshire condo market remained strong while the north Berkshire multifamily market was stable.
Residential:
Overall, the number of home sales in 2023 decreased 18% over the previous year, from 1,346 down to 1,109. North County sales started robust but fell in the 3rd quarter, with a net decrease of 10%. The north county residential (single family) market retracted the least of any other area in the Berkshires, with central closely following with a 17% decrease. South county, however, reported a 30% decrease in the number of sales and a 21% decrease in the dollar volume of sales. It should be noted that in southern Berkshire, sales of $171 million still far exceed pre-pandemic years. Notably, average sales prices rose significantly in southern Berkshire, modestly in middle and fell slightly in north.
That said, there were a few markets that recorded increases in 2023 over the previous year. In Adams, North Adams and Williamstown, the dollar volume of sale transactions increased. The total number of residential homes sold in North Adams was the same as last year and Williamstown sales rose by 4%, or 2 additional homes sold when comparing 2023 to 2022. In the middle registry area, Becket, Otis, and Richmond saw rising dollar volume for residential sales however, only Richmond increased the total number of homes sold slightly, up 4% or 1 additional sale. Pittsfield, the leader of the region in the number of homes available and on the market, slowed by 20%. New Marlborough and Sandisfield recorded a rising market compared to 2022. Sheffield sales fell, but the dollar volume transacted rose slightly.
While the most popular price ranges vary by where a home is located, you can see that most of the inventory and sales in the north Berkshire area are well under $300,000. In central, the majority of sales are in the $250-$350,000 range, but there is a pocket of activity between $500,000-$750,000 that is also popular. The $500,000+ range is also the most active market in the southern Berkshire area, but the homes available for sale are primarily above that price point. 2023 was a tough year for home buyers finding a property within their price range and being able to afford and qualify for a mortgage while rates moved up and leveled during the year. The 2022 prediction of a failing market rang true. With inventory remaining a challenge, high building costs, rising of both interest rates and inflation, sales were struggling this year. We see now more than ever that looking at specific property types, locations and price ranges is critical to understanding the buyers remaining in the market and where the housing gaps are that can be filled with our current inventory.
Condo Report
Condominium sales in southern Berkshire County fell considerably in 2023 compared to 2022 sales rates. Despite that retracting market, average sale prices of condos skyrocketed. North Berkshire trends were mixed, with gains of 6% in the dollar volume of condos sold and a decrease of 9 units sold (17%). Price appreciation surged in northern Berkshire condo sales as well, up to $406,336 on average. The middle Berkshire market condo sales tracked very closely to 2022 sales rates, but last year was not a strong condo market in the middle area. There was a slight appreciation in dollar volume and slight gain in total dollar volume sold, but still lower than the peak of the market.
Multifamily Report
Multifamily sales dipped slightly with a market slowdown but sales data was mixed. North county sales remained level from 2022, with a 9% increase both the total dollar volume of 1-5 unit buildings and the average sales price. Sales fell in the middle Berkshires region to pre- pandemic sales rates. Southern Berkshire multifamily sales retracted with one less unit sold, but a large jump in both the dollar volume transacted and the median sale price. The median price in 2022 was $379,500 for a multifamily building, compared to $797,250 in 2023, a 110% increase.
Land Report
After a few robust years of land sales, the market started to retract in 2022 and continued the decent in 2023. Despite land parcel sales falling from 202 in 2022 to 164 in 2023, the dollar volume and average sale price both rose over 2022. It is noted that the number of all raw land sales dipped in all parts of the county, but north and middle Berkshire recorded higher dollar volume transacted and rising average sale prices. With building costs an unknown going forward, it is important to maintain a close eye on permits and building opportunities to help alleviate pent-up buyer demand for existing homes in popular price points. It remains incredibly hard to build needed workforce priced housing with current costs and codes.
Commercial Report
Despite a commercial market heavily impacted by work-from-home and business closures, commercial sales rose in 2021, dipped in 2022 and regained momentum in 2023. North and south county sales rose commercial sales considerably, while central Berkshire declined overall. Please note: not all REALTOR assisted commercial sales are included in this data, only those on the
2024 Real Estate Market Forecast:
Lawrence Yun, chief economist and senior vice president of research for the National Association of REALTORS (NAR) eloquently stated at the beginning of the year, “2022 may be remembered as a year of housing volatility, but 2023 likely will become a year of long-lost normalcy returning to the market.” While some may see the declines reported this year as a market tumble, others view this as a return to pre-COVID activity levels with added inventory pressures. In Yun’s 2024 Housing Summit held in December 2023, he noted that after two years of sharp declines, existing-home sales are poised for improvement in 2024. Nationwide, existing-home sales end 18% lower than those of 2022, which mirrors the housing market in Berkshire County as well. Despite this drop, Yun is projecting that in 2024 existing-home sales will rise 13.5% and new-home sales could increase another 19% by the end of next year.
Overall, the 2024 real estate market projections are expected to present challenges and opportunities in availability of property and credit, with moderate changes dependent on outside economic and employment factors.
In the November 2023 ‘Mortgage Finance Forecast’, the Mortgage Bankers Association (MBA) anticipates 30-year mortgage interest rates will start at 7.1% in 2024 and gradually decline to 6.1% at the close of the year before dipping as low as 5.5% in 2025. As of December 7, 2023 the 30-Year fixed-rate mortgage was 7.03%, while the 15-Year fixed-rate mortgage dropped to 6.29%.
Despite the interest rate improvement projected, most real estate analysts believe that overall historically higher interest rates, tighter credit conditions, and less household savings will lead to a challenging market in the first quarter of 2024. It should be noted that first-time homebuyers will be the largest age group entering the market, and this will drive a lot of new demand. Finding entry-level homes to buy may be challenging because inventory is low, as is credit availability. Chief Economist Danielle Hale of Realtor.com also notes that nationally, home sellers are likely to face more competition from builders than from other sellers in 2024. “Builders are continuing to maintain supply and increasingly adapting to market conditions, they are increasingly focused on lower-priced homes and willing to make price adjustments when needed. As a result, potential sellers will want to consider the landscape for new construction housing in their markets and any implications for pricing and marketing before listing their home for sale, said Hale.”
The leading housing economists agree that the market will remain demanding, especially for first-time buyers without the advantage of proceeds from a prior home sale. The scarcity of available homes, compounded by record low inventory, will pose a significant obstacle for those seeking to make a purchase. Homeowners, benefiting from the historically low mortgage rates secured two years ago, are hesitant to sell, contributing to the current housing shortage of 5 million units nationwide, as revealed by NAR research.
On the flip side, existing homeowners find themselves in an advantageous position. With substantial home appreciation in recent years, they are poised to enhance their financial portfolios in 2024. Even in markets anticipating slight downturns, homeowners are expected to weather the drop successfully. Home prices have seen a remarkable 5% increase over the past year alone, with the typical homeowner accumulating over $100,000 in housing wealth in the last three years, according to NAR’s data. Furthermore, the wealth disparity between homeowners and renters remains significant, with the typical homeowner boasting $396,200 in wealth compared to $10,400 for renters, as per Federal Reserve data. As Yun pointed out, “Over the long term, homeowners build wealth over time.”
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