As we transition into the fall of 2024, Cambridge’s real estate market is telling a familiar yet evolving story: it’s a tale of two listings. Some homes are flying off the market with multiple offers well above the asking price, while others are sitting, seeing price reductions, and attracting less attention. This divide reflects a mix of buyer caution and the reality that certain homes are simply more desirable. Add in the uncertainty surrounding the presidential election, and the pace of transactions has slowed.

That being said, fall remains the second-best real estate season after spring. While election cycles often bring some market hesitation, this year’s heightened uncertainty is creating opportunities—especially for buyers looking to avoid bidding wars. And for those considering a purchase within the next six months, acting now could be a smart move, as the spring market following an election year is often robust.

Let’s break down what this means for both buyers and sellers in Cambridge this fall.

1. Current Market Conditions: Slower Yet Stable

After the summer rush, it’s normal for the real estate market to cool down, and 2024 is no exception. The Cambridge market remains stable, though activity has slowed slightly.

• Home Prices and Inventory: Prices are holding steady thanks to Cambridge’s continued desirability, even though homes are taking a bit longer to sell. With inventory still tight, we’re not seeing the major price drops some buyers might have hoped for.

• Buyer Behavior: With mortgage rates remaining high, fewer buyers are entering the market. However, the ones who are actively searching tend to be more serious. This creates opportunities for sellers to connect with committed buyers—but they may need to be more flexible when it comes to negotiations.

Pent-up demand is also building, as many buyers are sitting on the sidelines waiting for rates to drop. The good news? Many economists expect rates to come down in the near future. The Federal Reserve has already made its first cut, and more may follow, which could further improve buyer conditions.

2. How High Mortgage Rates Are Shaping Buyer Decisions

Mortgage rates have remained elevated compared to pre-2020 levels, and this is having a big impact on buyer decisions.

• The Impact of Rates on Monthly Payments: Let’s break it down. A $1 million home with 20% down at today’s 6.5% mortgage rate means a monthly payment (excluding taxes and insurance) of over $5,000. Compare that to a few years ago when rates were around 2.5%—the payment for the same home would have been around $3,160. This dramatic difference is leaving some buyers hesitant.

• Planning for the Long Term: While it’s unlikely that rates will drop back to pre-pandemic levels, buyers can explore creative options. Adjustable-rate mortgages (ARMs) or temporary rate buydowns are two ways buyers might be able to lower their payments initially, with the potential to refinance later as rates improve. For those looking to buy in Cambridge, it’s important to focus on the long-term value of the home and not just the current rate environment.

3. Cambridge’s Limited Housing Supply: A Seller’s Advantage?

Housing inventory in Cambridge remains historically low, which continues to play in sellers’ favor.

• Low Supply, High Demand: Despite fewer buyers in the market, demand for homes in Cambridge remains high, thanks to its proximity to Boston and its world-class institutions. This imbalance between supply and demand keeps the market competitive, especially for move-in-ready homes.

• The Key to Selling Quickly: Pricing remains critical. While some homes are selling fast with multiple offers, overpriced properties are sitting on the market. Sellers need to price accurately to avoid unnecessary delays. Additionally, focusing on curb appeal, making minor upgrades, and staging homes to appear turnkey can help attract those motivated buyers who are looking for a home that’s ready for immediate occupancy.

4. Seasonal Opportunities: Why Fall Might Be the Perfect Time to Buy

One of the unique aspects of the fall market is that while activity slows, the buyers who remain are often more motivated. This creates potential opportunities for buyers, especially those who have been priced out or outbid during the competitive spring and summer markets.

• Buyers Have Leverage: With fewer buyers competing for homes, this is a great time for buyers to strike a deal. Homes that may have been unattainable during the spring and summer bidding wars could now be within reach.

• Don’t Try to Time the Market: Buyers should focus on when they’re ready to buy, rather than trying to time the market. If you’re financially and personally prepared to purchase a home, now can be an excellent time to make your move. The right time to buy is when you’re ready—not when the market conditions seem perfect.

• Sellers Can Still Benefit: While fall presents opportunities for buyers, sellers can still take advantage of serious buyers who are looking to secure a home before the end of the year. The key is pricing competitively and ensuring your home is move-in ready to attract these motivated buyers.

5. What to Expect in 2024 Through the Start of 2025: Cambridge Real Estate Predictions

Looking ahead into 2024 and beyond into 2025, several factors will shape the Cambridge real estate market.

• Broader Economic Trends: Inflation, rising home prices, and continued supply constraints will play significant roles. Additionally, the Federal Reserve has already cut rates by 50 basis points, and more cuts are expected in the coming months. This could stimulate more buyer activity as we head into the spring of 2025.

• Localized Factors: Cambridge’s real estate market will continue to be fueled by its academic and tech communities. Harvard, MIT, and other world-class institutions will remain steady demand drivers, election cycle or not.

• Zoning Changes: One significant factor to keep an eye on is Cambridge’s proposed new zoning ordinance, which aims to eliminate single-family zoning across the city. This would allow multi-family developments on lots previously restricted to single-family homes. The change, designed to increase housing supply and affordability, has widespread support and could significantly alter the housing landscape in the coming years.

6. Tips for Buyers and Sellers Navigating the Cambridge Market

Whether you’re buying or selling this fall, here are a few key tips to help you navigate the market.

• For Buyers:
  • Focus on your long-term goals and be ready to negotiate.
  • Get updated pre-approval letters, especially given recent rate fluctuations.
  • Be patient, but don’t try to time the market. The right time to buy is when you’re ready, not when the market is perfectly aligned.
• For Sellers:
  • Pricing is always key, but in this market, it’s more critical than ever. Be competitive and realistic.
  • Offer incentives like covering closing costs or including appliances to make your home stand out.
  • If possible, make your home as turnkey as possible. Buyers want to move in with minimal hassle.

Conclusion

The Cambridge real estate market may be slowing in terms of activity, but there are still plenty of opportunities for both buyers and sellers. While the election cycle is creating some uncertainty, motivated buyers and sellers can still find success by making informed decisions.

If you’re thinking of buying or selling in Cambridge this fall, reach out for personalized advice. Stay informed about market conditions and make sure to subscribe for updates. Whether you’re looking to buy your dream home or sell at the right time, we’re here to help you every step of the way.