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Over the past two years, the substantial imbalance of low Boston condos for sale and high buyer demand pushed home sales and buyer competition to new heights. But this year, things are shifting as supply and demand reach an inflection point.

The graph below helps tell the story of just how different things are today.

The Latest on Supply and Demand in Housing | Simplifying The Market — Real Estate

Boston Condo for Sale Demand has Eased

This year, Boston condo buyer demand has eased as higher mortgage rates and mounting economic uncertainty moderated the market. This slowdown in demand is clear when you look at the red bar on the graph. It uses the latest data from ShowingTime to illustrate how showings (an indicator of buyer demand) have softened by just over 12% compared to the same time last year.

Now for a look at how housing supply has changed, turn to the green bar. It uses data from realtor.com to show active listings are up nearly 27% compared to last year. That’s because the moderation of demand allowed housing inventory to increase in 2022.

What Does This Inflection Point Mean for Boston Condo Buyers?

If you’re thinking of buying a home, you’ll have less competition and more options than you would have had last year. Enjoy having more Boston condos to choose from in your home search and lean on a trusted real estate professional to understand how the increase in supply has also increased your negotiation power. That professional can talk you through the opportunities and challenges buyers face in today’s shifting market. You may be surprised to find they’re different than they were a year ago.

What Does This Inflection Point Mean for Boston Condo Sellers?

If you’re looking to sell your house, know that inventory is still low overall. That means, if you work with an agent to price your house based on current market value, it will still sell despite the inventory gains and moderating buyer demand this year. That’s because there are still buyers out there who want to move, and your house may be exactly what they’re looking for.

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Supply and Demand in Today’s Market [INFOGRAPHIC] | Simplifying The Market — Boston Seaport condos

There are many unsubstantiated theories about what is happening with Boston condo prices. From those who are worried that prices are falling (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of Boston condos for sale, that is in high demand, prices increase. It is that simple. In Boston real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything greater than seven months will cause prices to depreciate (see chart below).

Will Home Prices Continue to Increase? | Simplifying The Market

Boston condos for sale

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).

Boston condos for sale

Boston Condos for Sale and the Bottom Line

If Boston condo buyer demand continues to outpace the current supply of existing Boston homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.