The number of homes for sale in Massachusetts is at an eight-year low, despite an increasing number of prospective buyers and a housing market that — overall — is on the mend. Some owners either can’t afford to sell because they still owe more than their properties are worth, while others aren’t yet convinced it’s the right time. The result is the demand for homes far outstrips the meager supply, an equation that threatens to hold back growth in a business crucial to the state’s economy.
“There is nothing on the market for me to want to buy to move into,’’ said Krause, a 31-year-old pharmacist who rents from her sister. “I’m afraid to put her condo up for sale and end up on the street.”
The situation differs dramatically from a few years ago, when the local housing market slowed to a glacial pace following the national subprime mortgage meltdown and tumbling home values. Then, real estate agents were practically begging for people to go house-hunting. Now, potential buyers are out in droves — motivated by low interest rates and renewed confidence in the economy — and it’s homeowners who are on the sidelines.
In Massachusetts, the number of single-family homes for sale fell to 18,329 at the end of January, 27.3 percent fewer than during that month last year and the steepest year-over-year fall in almost a decade, the Massachusetts Association of Realtors reported this week.
The tight market has prompted robust competition in some of the Boston-area’s more popular neighborhoods, prompting bidding wars and price inflation, real estate agents say. Statewide, homes are selling more quickly than a year ago. Single-family homes remained on the market for an average 114 days in January compared with 128 days in January 2012, the realtors group said.
“More buyers are competing for fewer homes and we are shifting to a stronger seller’s market,’’ said Sam Schneiderman, president of the Massachusetts Association of Buyers Agents.
Concerned the lack of properties for sale could hurt the all-important spring selling season, real estate agents are cold-calling potential sellers, penning handwritten notes, and launching seminars to attract new business. Their universal message — demand is high, supply is low; it’s time to list. “Everybody in the world is trying to reach sellers,” said Alex Coon, a Boston-area manager of the online brokerage firm Redfin.com. “Home-buying classes are brimming over. Anywhere we can find a seller, we are trying to reach them.”
It’s not just that sellers are sparse — it’s that buyers are quickly snatching up attractive homes almost as soon as they are put up for sale. Last year, the Massachusetts housing market began to build momentum. Statewide, 46,887 single-family homes were sold, the most since 2006, according to Warren Group, a Boston company that tracks local real estate. The buzz of activity carried over into January, with sales 10 percent higher than the same month in 2012, Warren Group said.
But some worry that if sellers don’t soon start showing up in greater numbers, the upward sales trajectory will falter.
“If we don’t have the inventory to sell, we won’t be able to continue” improving, said Kimberly Allard-Moccia, the president of the Massachusetts Association of Realtors and broker-owner of Century 21 Professionals in Braintree.
Currently, there is a 4.7-month supply of single-family homes for sale, according to the Massachusetts Association of Realtors. A balanced market has about 6 months worth of supply according to the Washington, D.C.-based, National Association of Realtors. Anything less tips the market in favor of sellers.
Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University, said the relative lack of homes for sale suggests many interested home buyers are coming from outside the area, or are local first-time home buyers or investors. Otherwise, he said, buyers would be selling their existing properties — leaving local inventory relatively unaffected. Thin inventory puts upward pressure on prices, Belsky said, but it’s still unclear whether the increases are enough to get more people into the market. “It’s an open question,” he said.
John Ranco, a senior sales associate for Hammond Residential Real Estate in Boston’s South End, said many homeowners who couldn’t sell their properties during the recession turned to renting, which currently can be a lucrative source of income in the city. In addition, he said, more Boston residents also have decided to stay in their current homes, lessening the opportunities for newcomers.
Also, thousands of homeowners are still plagued by a recession hangover. Despite the recent upturn, Boston-area home values are down nearly 16 percent since their peak in 2005. So many homeowners owe more to lenders than their properties could fetch for sale.
Other potential sellers are simply doing what some do every year — waiting for the snow to clear. “No one likes muddy boots tramping through their houses,’’ Ranco said.
Meanwhile, real estate agents are becoming more aggressive about targeting sellers.
Steve Mehigan, manager of the Coldwell Banker Residential Brokerage office in Waltham, said his agents are reaching out to homeowners who unsuccessfully tried to sell their properties with other real estate offices. Sometimes his agents will show up at a homeowner’s door to let them know multiple buyers are interested in their property.
“Our buyer appetite is absolutely voracious,” Mehigan said.
Brian Montgomery, a buyer’s agent with Charlesgate Realty Group in Boston, was so frustrated by his inability to find suitable homes for his clients that he recently published a blog post titled: “Desperately seeking sellers.” It included a wish list of nearly two dozen Boston-area homes his clients would like to buy.
Montgomery listed properties in Brookline, Boston, and Cambridge. “We’re hoping that by publishing this list, an owner may wake up from their amnesia,” he wrote, “and realize they actually want to sell their property!”
For Emily Glass, 33, of Arlington, it’s not amnesia that is keeping her in her Arlington condominium. She just doesn’t see any place better. “There is really nothing available,” Glass said.
Krause, the Roslindale condo dweller, said properties she’s toured over the last few months are either too small or lack a yard. But she also gets the irony of her situation — while she searches for the perfect home, her family’s condo remains off the market and out of play for some other prospective buyer.
“Right now, I need some people like me to let their places go,” she said.Jenifer B. McKim can be reached at firstname.lastname@example.org. Follow her on Twitter @jbmckim.