Boston Housing Market
Typical of most housing markets in the US, the Boston housing market is constrained due to a lack of houses for sale. 2021 was a record sales year, however of late, supply is squeezed and activity appears to be easing.
Buyers too are concerned that mortgage rates might be on the rise. They are hoping to find a home, capture a lower fixed rate mortgage, and put in a solid offer. That of course, pushes prices higher. Yet, as you’ll see from the stats below, hopes for rising inventory are not strong. Supply constraints and rising materials and labor costs and shortages will hurt the home building sector resulting in even greater shortage at least until later in the year (post covid?).
Massachusetts Realtors reported Home in Massachusetts rose $50,000 from December to December, while the average condo price rose $30,000.
Sales of homes in the state in 2021 hit a record despite the fact prices rose 8.3% for single family houses. 5155 houses and 2052 condominiums were sold in December. Homes for sale have plunged almost 50% while condo sales fell 56% year over year. New home listings are down 15.8% yea over year while condo new listings have dropped 18%. Only 2181 homes and 1,000 condos were newly listed in December 2021.
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Massachusetts Residential Sales and Prices YoY Change
Screenshot courtesy of Ma Realtors Association
Boston Housing Market Forecast
Boston is an expensive city and with rising inflation, high home prices, limited housing for sale, and some return to the city for workers who must work at head office or workplaces in greater Boston (post covid return to work), price rises might be higher than expected.
Gay Cororaton, a senior economist and director of housing at NAR believes prices will be more moderate in 2022 at about 5% growth. “We expect more modest price appreciation of less than 5 percent, compared to the double-digit gains we’ve had,’’ she said but noted that 10% gains are possible. NAR believes prices could rise by 7.5% in the Boston metro area in 2022.
Busy Sales in Greater Boston
Single-family home sales in Greater Boston improve 5.4% to a new sales record. 13,746 homes were sold in 2020, vs to 14,494 homes sold in 2021. Condo sales in Boston too, reached a new record level to 13,825 ( up 31.8%) almost 3400 more than the 10,,488 condos sold in 2020.
GBAR President Melvin A. Vieira, Jr., notes the strength of the market saying that regardless of the pandemic sales challenges for Realtor, along with record high prices and a shortage of properties to sell.
The median sales price of houses in Greater Boston grew 10.3% year over year in December, rising from $680,000 in December 2020 to $750,000 last month. And the median sale price for condos in Boston rose 9.2% over the previous 12 months, rising $52,550 to $622,500 in December 2021.
Screenshot courtesy of GBREB
Boston Housing Market Forecast
Boston Agent Magazine surveyed a number of Boston Realtors about their predictions and outlook for 2022.
They appear to be of the opinion the momentum for demand and price will persist in 2022. the note the trend to remote work and the need for home office space will color the market. With some businesses relaunching their home offices, some workers will be making their way back in the vicinity and will need to buy or rent to move there. They’ll want short commutes, which are not easy to get near Boston, so price competition might be intense.
They hope interest rates will not rise and that lenders will be reasonable about their borrowing rates and that mortgage financing won’t be a big hassle for buyers.
One Realtor is pleased with the growing demand for condominiums. That trend would be bolstered by a return to Boston offices and workplaces and the unaffordability of single family dwellings.
Another advises Realtors to be positive and do their marketing and business development and reinvest in their business and they’ll be rewarded. It will be a competitive market for Boston Realtors too with so few houses and so many competing real estate sales people.
The communities they believe will be the hottest include: Back Bay, Beacon Hill, South Boston, and Seaport. I worked for a Seaport real estate agency and it has always been one of the hottest communities.
Buying with Cash, Site Unseen is a Key Indicator
“The housing market is really strange right now,” said Daryl Fairweather, the chief economist at Redfin. “Nearly two-thirds of homebuyers are making an offer sight unseen over the last year.” – from report in boston25news.com.
The issue with the Boston real estate market is the same as any US housing market, a lack of supply from suppressed home construction and migration of people into Greater Boston. Now that migratory trend has reversed yet supply outside of Boston simply doesn’t exist. This means bidding wars for houses and increased sales of condos in the city.
This GBAR graphic shows the strong sales growth during March. Condos sales year to date shows buyers have become interested in condos again.
Housing supply is the key variable and it has trended downward when it usually trends up. April and June numbers may be less that March’s volume and that puts significant upward pressure on prices. Sellers have nowhere to go, so the only release valve for price pressure is fast rising mortgage rates or new construction. Neither seems likely right now, so prices must rise to a point where seller fears of the unknown are overcome and they decide to list. A good market for home relocation specialists with a good imagination.
Take a good look at this heatmap of rental prices, and it might give you a good idea of home prices as well. The further you go from Downtown Boston, the more likely you are to find affordable homes. Be forewarned of Boston’s congested, time consuming commutes to which I can attest are as bad as any.
Boston Home Prices Compare?
Investors might want to review properties outside of Boston city such as Easton, Lawrence, Worcester, Lynn, Salem, Stoughton, Framingham, Brockton, and Dedham. They’re nice communities and there’s plenty of property to build on and demand is expected to be consistent for single family homes.
Yes, it looks as though home prices are about to rise in Boston. So the questions: “should I buy a house right now?” or even “should I sell my house” in Boston aren’t easy to answer. To help with a sell decision, see the post on selling tips and best renovation for ROI and where to move to.
What Supports the Boston area Economy?
Boston has a strong regional economy bolstered by transportation, tourism, financial services, and increasingly venture capital. Boston is becoming the Silicon Valley of the north with major influx of funding for startups in FinTech, MedTech and EduTech. Ultimately, all decisions to buy a home in Boston relate back to the US economy, US housing market, and the Massachusetts economy.
Forecast For Boston GDP
Boston’s Powerful Economic Engine
Boston’s economy is a power house yet restrictions on immigration will retard its output. Retiring babyboomers (although many are continuing to work) and a full employment situation mean growth will be constrained by a lack of workers, including skilled workers from other countries.
It’s good news for workers in other cities and states who need jobs. If you can find somewhere to live in Boston, you should have little trouble finding a great job. For those hoping to move your business to Boston and wanting to boost your online exposure, it’s wise to find a Boston SEO Company which make a difference.
Finding a Home In Boston’s Many Neighborhoods
If you’re thinking of a move to Boston, you’ll want to scout out the most affordable neighborhood for you and your family. Prices vary a great deal. NAR reports these recent prices:
|Units For Sale
|Units For Rent
|Back Bay East
|Back Bay West
There you have a good look at the State of Massachusetts and the Boston Housing market. The outlook is for continuing high prices and limited availability. You’ll need to work closely with your Boston area Realtor to get first dibs on homes for sale.