To put it bluntly, the housing market in suburban Boston is “crazy.’’ That’s the description Laura Semple and Beth Hettrich, agents with the Semple and Hettrich Team of Coldwell Banker Realty in Sudbury, gave.
“We listed one house at $1.1 million based on comparable sales that had 12 offers and sold for $1.26 million in one day,’’ Semple said. “That house was valued at $975,000 just two years ago.’’
So few homes are available for sale in the Boston suburbs, said Hettrich, that everything they list sells immediately. “Buyers are waiving inspections and appraisals and financing contingencies because they know they’ll face multiple offers.’’
The frenzy in the suburbs, triggered by several factors, including low mortgage rates and the desire for more space during the pandemic, is driven by the extreme lack of homes for sale, said Helen Tarantino, a realtor with Shore Road Realty Cityside in Boston.
“There are still lots of buyers and too few homes in the city, too,’’ said Tarantino, “but in the suburbs, sellers are getting offers in the double digits. In the city, sellers are getting six or seven offers.’’
Tarantino said buyers will pay $900,000 to $1 million for a small house with a little yard near the city, but if they’re willing to drive an hour or work remotely, they can spend $500,000 to $600,000 for a bigger house and yard in the farther suburbs.
“Before the pandemic, homes in communities that were closest to the best-paying jobs in Cambridge, Somerville, and Boston were selling for prices well over the previous peak,’’ said Tim Warren, CEO of the Warren Group, a real estate analytics firm. “Now that buyers are working remotely and expect to return to the office only once or twice per week, that opens up the possibilities for suburban, exurban, and rural locations to blossom.’’
Are we in bubble territory?
The median sales price across Massachusetts for single-family homes rose by 17.1 percent in February 2021 compared with February 2020, according to the Massachusetts Association of Realtors, while condo sales prices rose just 5.1 percent. The median sales price rose year over year by 10.2 percent in Suffolk County, 12.5 percent in Middlesex County, and 19.2 percent in Worcester County, according to MAR.
“I’m a little concerned about the sudden escalation of prices, but I think we have a long way to go before we’re in the danger zone,’’ Warren said. “When the bubble burst in 2006, we had seen six straight years of price appreciation at 10 percent or more. Now we’re only a year or so into that kind of appreciation.’’
Warren also points out that lenders are far more careful today about mortgage approvals than in the early 2000s.
“There’s a different dynamic now with pent-up demand and not enough housing rather than a mentality of buying while the market is hot,’’ said Tarantino. “When the bubble burst before there were too many houses being built. We’re not in any danger of oversupply now.’’
Issues resolved with cash
When prices spike as quickly as they have in the past year, appraisers sometimes have difficulty finding comparable sales to justify the price, but Tarantino said the demand is proof enough of market values.
“When you have 10 offers over the asking price and buyers paying cash, it’s hard to dispute that this is where the market is right now,’’ she said.
While most properties appraise without an issue, if there is a gap between the sales price and the appraised value, the buyers must make up the difference with cash, said Semple.
“A year ago, the buyers and sellers would work out an agreement, but now the sellers can just move on to the next offer,’’ said Semple.
Tarantino believes that the continued lack of supply and work-from-home policies will keep demand and prices high in the suburbs for the foreseeable future.
Michele Lerner can be reached at [email protected]. Subscribe to the Globe’s free real estate newsletter — our weekly digest on buying, selling, and design — at pages.email.bostonglobe.com/AddressSignUp. Follow us on Facebook, Instagram, and Twitter @globehomes.