PITTSFIELD — Gary Lavariere and his wife, Lauren, recently went to look at a house that just had gone on the market in Lanesborough.
They were not alone.
“We went the first day and there were 18 showings and they had a cash offer, $25,000 over, I think, the third day,” Lavariere said. “You can’t compete with that.”
The couple didn’t get that house, but they found themselves in a situation that lots of Berkshire homebuyers have experienced lately. The demand for single-family homes has set off a price-bidding war locally and nationally.
The median sale price for single-family homes in the Berkshires rose 32.2 percent during the fourth quarter of 2020, on a year-over-year basis, the second-largest increase among similar areas across the country during that three-month time span, according to the National Association of Realtors.
And the momentum has continued into this year.
The median sale price for single-family homes in the Berkshires in January increased 4.4 percent on a year-over-year basis, from $225,000 in January 2020 to $234,950 last month, according to the Warren Group of Peabody, which tracks all state real estate transactions. Statewide, the median sale price for single-family homes and condominiums reached all-time highs for the month of January.
“We had a lot of pent-up demand going into COVID,” said Sandra Carroll, CEO of the Berkshire County Board of Realtors. “Our markets were really quiet; the only things we were working on for several months were urgent sales, so to speak. Then it seemed like after, there were new freedoms, people wanted to get out of cities or get back with family, and then when people started working from home, it created a whole new dynamic in our marketplace.
“New buyers were entering the market,” she said. “I think that the demand started causing other people who were thinking about selling to get in and buy something that they were looking for.”
Only the Bridgeport, Conn., metro area, where the median sale price for single-family homes soared 39.0 percent, experienced a larger increase during the last three months of the year than the Pittsfield metro area, which includes all of Berkshire County. The national median home price for single-family homes rose 14.9 percent on a year-over-year basis, to $315,900, during the fourth quarter.
Every metro area tracked by the National Association of Realtors experienced a price increase during the fourth quarter, with 161 — 88 percent — registering double-digit increases. In contrast, only 115 metro areas registered that kind of growth during the third quarter. The Realtors’ group has been tracking median single-family home prices in the country’s metropolitan statistical areas since 1979.
In the Berkshires, the median sale price jumped from $222,800 during the fourth quarter of 2019 to $294,500 during the last three months of 2020, according to the Realtor association’s figures, and from $230,000 to $294,500, an increase of 28 percent, according to figures compiled by the Berkshire County Board of Realtors, which solely tracks Realtor-assisted transactions.
The median sale price in the Berkshires rose 21.9 percent, to $270,000, in December, 16.5 percent, to $258,000, in November, and 27.9 percent, to $275,000, in October, year over year, according to the Warren Group. Year-over-year sales of single-family homes in the Berkshires increased 66 percent in October, 43.5 percent in November, 52.3 percent in December and 20 percent in January, according to the Warren Group’s figures.
‘Ripe’ for price increases
Record-low mortgage rates, high demand and low inventory created the conditions that led to the significant price increases locally and nationally, according to people who track those statistics.
“The fourth quarter of 2020 presented circumstances ripe for home price increases,” Lawrence Yun, chief economist for the National Association of Realtors, said in a news release. “Mortgage rates reached record lows, thereby driving up the demand.”
Homes that go on the market in the Berkshires are being snapped up quickly.
“If you put any home on the market and it’s priced right, it can go under contract in definitely less than a week,” Carroll said. “If it’s really popular, you have people lined up so that Realtors have to slow the process to be able to get enough buyers into the house safely. If 10 people want to see a hot property, they aren’t going to do it in one day. Before, it would be an open house, but now, there’s staggered showings.
“People are chomping at the bit trying to get in the door,” she said. “You can see buyer frustration.”
But, this high demand for single-family homes in the Berkshires has left the county with a dearth of inventory. As of last week, only 300 homes were on the market, while typically, the number is about 1,000, Carroll said.
“In our last report, we only had one month of inventory,” Carroll said, referring to the county as a whole. “Typically, we consider seven months of inventory to be balanced in Berkshire County. It’s between 10 and 14 months in South County, and now they’re looking at two months of inventory, It’s a very significant issue.”
Nationally, inventory is at record lows, with homes so scarce that Yun refers to the shortage as “grim.” He said these conditions led to “insufficient supply in the fourth quarter.”
Home sellers might have benefited from the fourth-quarter price increases, but Yun believes that these substantial shifts eventually will hurt buyers.
“The average working family is struggling to contend with home prices that are rising much faster than income,” he said. “This sidelines a consumer from becoming an actual buyer, causing them to miss out on accumulating wealth from homeownership.”
Six of the 11 metro areas that had the largest price increases across the country during the fourth quarter are located in the Northeast, and all of them, including Pittsfield, are located within driving distance of major metropolitan areas. Price increases in those types of areas indicated a strong demand for vacation homes and affordable homes during the coronavirus pandemic, according to the National Association of Realtors.
“Although tourism took a major hit overall throughout 2020, our data shows that vacation housing still did well in terms of sales,” Yun said. “Many people purchased in these areas because they found themselves with new work-from-home freedoms.”
Referring to the National Association of Realtors’ analysis, Carroll said, “a lot of those points are very relevant to Berkshire County as well. Things shifted due to COVID.”