Pioneer Valley Inventory Blues

If you have been looking for a two to three-bedroom-ranch or a nice two-story well-built house between $200,000 and $320,000 in the Pioneer Valley or the Berkshires, you might have noticed how quickly those properties have been selling lately.

There are a few factors at play that explain the current sellers’ market in Western Mass.

Beside the obvious historically low mortgage rates, possibly the main reason is people are moving out of New York and Boston, choosing less populated areas. Many New Yorkers have been priced out of the Hudson valley but once they get to Northampton, Easthampton or South Hadley they feel like most homes are a bargain. Professionals are relocating because they are finding themselves able to work anywhere.

Baby boomers are retiring and choose the Pioneer Valley for quality of life.

Affluent people are buying second homes in the Berkshires.

The buyers I describe above are sometimes paying cash for their new homes.

These circumstances have made the market for average local buyers almost prohibitive.

If you are a buyer in these challenging times, you may ask your agent to calculate the absorption rate for the towns that you are interested in. 

Absorption rate indicates the number of houses that sell in a given area over a given time. In other words, it indicates through a mathematical formula what is the inventory of houses available for sale.

Absorption rate is obtained by dividing the number of available houses on the market by the average number of homes sold per month.

The higher the rate the better the market is for buyers.

I had some fun calculating the current A.R. in a few Western Massachusetts towns for June and July, and this is what I found (this is just for single family homes):

Northampton:  38 sold in the past two months; 40 houses currently available

Easthampton:  19 sold in the past two months; 12 houses currently available

South Hadley: 39 sold in the past two months; 15 houses currently available

Granby: 21 sold in the past two months; 23 houses currently available

Holyoke: 43 sold in the past two months; 28 houses currently available

Greenfield: 29 sold in the past two months; 24 houses currently available

Amherst: 53 sold in the past two months; 62 houses currently available

You will notice that, for June and July, in most of these town the A.R. was around 1 or 2—and that is insane! It means that it will only take a month to run out of inventory. What makes it even crazier is the fact that the prices are at a historic high.

So: if you are a buyer, take a deep breath. Keep looking, and know that you are looking where people want to be.