Silver Linings Exist, Despite a Tight Regional Housing Market

After several years of bidding wars, waived inspections and homes selling in a weekend, the regional real estate market across the North Shore has cooled—but not because homes are suddenly plentiful or cheap.

 

Instead, the region is settling into something closer to normal.   Buyers have a bit more breathing room.   Sellers face less frenzy.   But a core problem remains: there are still too few homes for too many people who want to live here, according to a new report by the Beverly-based North Shore REALTORS (NSR).

 

“It’s still supply and demand,” said Lisa White, NSR president in a sit-down last week.  “And the demand is stronger than the supply, for sure.”

 

Winter has added a seasonal lull.   Snow, cold temperatures and shorter days tend to slow open houses and listings across New England.   This is to say nothing of a year (like this one) when the Patriots make it to post-season football.   But that doesn’t mean the market is weak, White said.   In fact, winter can favor serious buyers and sellers.

 

“The people who are out looking now need to move,” she said.   “So, if yours is one of only a few homes on the market, people are going to fight over it.”

 

If anything, the North Shore’s appeal—particularly in Manchester, Essex, Rockport and Gloucester, which has seen unprecedented jumps in home prices over the last decade—has strengthened since the pandemic.  Remote and hybrid work allowed many Boston renters to look beyond the city for more space, yards and parking. 

 

White said communities once seen as weekend or summer destinations are now year-round communities.   Buyers will pay a premium for beaches, walkable downtowns and strong schools — and it’s still seen as a relative value compared with Boston or the western suburbs.

 

This is particularly true of Cape Ann, where buyers may have visited the area for a beach day and returned to buy.   For those already used to spending $5,000/month in rent, Cape Ann could feel like a better long-term investment.   Easy access to commuter rail lines and Route 128 only reinforced that shift. 

 

That steady demand, says White, has helped keep prices elevated even as interest rates climbed.

 

The bigger issue isn’t demand.   It’s movement — or the lack of it.

 

This is a familiar refrain for those who watch real estate, or know someone who’s impacted by the current environment.   First-time buyers and longtime homeowners looking to downsize are effectively blocking each other.   A young family might be ready to buy a starter home, but the empty nesters who would typically sell that home can’t find smaller, more affordable options to move into.

 

“There’s nowhere for them to go,” White said.

 

Many longtime owners also hesitate to sell because they locked in ultra-low mortgage rates during the pandemic.   A three percent loan can feel like handcuffs, even if their home no longer fits their needs.

 

White argues that psychology often outweighs math.  With the appreciation most homes have seen over the past decade, many sellers are sitting on hundreds of thousands of dollars in equity.  Moving to a slightly higher interest rate might not change their monthly payment as much as they assume.

 

“If the only thing that’s working for you is the interest rate, that’s probably not a good reason to stay,” she said.

 

Younger buyers face a different hurdle.   The typical first-time buyer is now closer to age 40 than 30, White said, reflecting years spent saving for down payments in a high-cost market.   That’s a big shift.   By the time many people buy their first home, they’re already juggling kids, aging parents or limited space. 

 

That delay reduces turnover and keeps inventory tight across all price points.

 

“It creates a backup in the whole system,” she said.

Massachusetts began to address the shortage through zoning reforms aimed at adding more housing options.   Gov. Charlie Baker, a Republican, ushered in “Housing Choice,” an ambitious set of initiatives aimed at loosening the tools that communities use to obstruct housing production.   Baker said the bill, which passed in 2019, was necessary to support economic growth after major employers began citing limited housing options in Massachusetts as a factor preventing them from attracting and keeping good employees.

 

Housing Choice relaxed approval thresholds for zoning changes at town meetings.  It also gave rise to the controversial “3A MBTA Zoning” requirement for towns served by the MBTA Commuter Rail to expand areas that allowed multifamily housing. 

But a less appreciated and more powerful change came later, in 2024’s Housing Bond Bill, according to White, that allowed by right accessory dwelling units, or ADUs—small on-property apartments or cottages—in single family zoning districts across all communities statewide.  The units can house relatives, caregivers or renters, providing both flexibility and income.

White sees ADUs as one of the most practical near-term tools for easing pressure, especially for multigenerational families or seniors who want to age in place.  Or for first time home buyers who can factor rental income into their mortgage formulas.

 

More mixed-use development and housing near transit could also gradually increase supply, she said.  Still, meaningful change will take time.  It will take time for homeowners to be educated about the new rules.  Further, she said, new construction remains expensive, and many communities are cautious about density.

 

“It’s moving in the right direction,” White said. “It’s just slow.”

 

For buyers scarred by the pandemic frenzy, today’s environment may actually be healthier.

Rising rates have cooled the extreme competition that once drove offers that shocked longtime locals—especially during Covid when home closing prices regularly went well over the original asking price, and all-cash offers were more common. 

 

Today, those all-cash bids are less frequent.  Another Covid-era buying strategy, waiving home inspections, have now been made illegal in Massachusetts, which White says is a “very good thing.” 

 

Most importantly, the climate is now friendlier to buyers, and negotiation has returned.

White says home buyers today may also find opportunities in listings that have lingered on the market for two or three months.  Perhaps it’s because the property is unique may have few natural buyers.  Or perhaps it’s because the property is simply overpriced.

 

Whatever the reason, White said, buyers and sellers “can have a conversation now.”  And that’s a sign of a healthy market.

 

For sellers, her advice is simple:  think creatively.  Maybe a seller shouldn’t wait for perfect weather or a blooming garden to list their property.  If inventory is low, winter listings can attract motivated buyers.  It’s a zig-when-others-zag approach.

 

“Think about it, people looking at real estate in the off season are more serious,” said White.  “So those people who are out looking right now really want, and need, to move.”

 

Another piece of advice for sellers?  Don’t fixate on interest rates.  Homeowners fixated on the ultra-low mortgages they locked in a decade ago may be misreading their options.  White said sellers can overlook how much equity they’ve quietly built as prices surged.  A homeowner who bought in 2015 or 2016 may be sitting on several hundred thousand dollars in gains, money that can be rolled into a down payment and significantly shrink the size of their next loan.  In many cases, that equity offsets the higher rate enough that the monthly payment ends up surprisingly similar.

 

So, in the end, across Cape Ann, homes to buy are still scarce.   But the good news is the days of instant sales and sky-high escalations may be over, and the fundamentals haven’t flipped.  As long as people want what the region offers — the coast, strong schools, proximity to the city—that pressure isn’t going away anytime soon.