What’s behind the high Boston condo listing prices
Boston Condos for Sale and Apartments for Rent
What’s behind the high Boston condo listing prices
Let’s take a deep dive into why sales prices are so high.
“The American dream of owning a house may be vanishing,” the U.S. Government Accountability Office said in a research report, “because of higher housing prices and a decline in housing affordability.”
“Many young, middle-income, and first-time home buyers can no longer afford to buy an existing house.”
Factors contributing to high housing prices
The ongoing rise in home prices can be pegged to two key factors, said Josh Hirt, senior U.S. economist at Vanguard: a lack of supply and what’s called the “rate lock effect.”
Demand outpacing supply
There’s no two ways about it: America has a supply issue regarding affordable homes. By “affordable,” we’re talking about entry-level homes designed for the first-time home buyer.
First, there’s a longstanding lag in building. “There was a notable slowdown in housing starts in the wake of the financial crisis of the early 2000s,” Hirt said. During this period, the market was flooded with foreclosure properties, and supply far outpaced demand. In reaction, builders were reluctant to forge ahead with new construction projects catering to first-time buyers. “Now, we really need those homes, and they’re not there,” said Hirt.
So, that’s the first part of the reason home prices remain high: There are more buyers in the market than available properties — especially for low-to-moderate-income buyers looking to get a slice of the homeownership pie. This creates a seller’s market, which tends to keep prices high. Sometimes, it creates bidding wars where homes sell for over market value. But historically low new construction starts aren’t the only reason there’s a supply issue in American housing.
The rate-lock effect
Hirt puts it plainly: “If you have a mortgage in the 3% range, there’s little incentive for you to trade up or out of that home when mortgage rates today are more than double that.”
In January 2024, nearly half (47.9%) of homeowners with a mortgage backed by Fannie Mae or Freddie Mac had an interest rate of 3.5% or lower, according to research by the Urban Institute. At the same time, the average interest rate for a new 30-year fixed-rate mortgage was 6.6%. That’s a whopping 3.1% difference. On a $300,000 mortgage loan, this would add $580 per month.
The result? “A lot of homeowners who would be selling their homes just aren’t doing that,” said Hirt. The cost is too high.
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What’s behind the high Boston condo listing prices
I’ve been seeing a spike in downtown Boston condo listing prices lately. There are a few reasons behind these high listing prices for Boston condo for sale.
We’ve had a robust real estate Spring to date, with Boston condo sellers obtaining their listing price in many cases.
Boston Condo Sales Comps
Boston condo sellers tend to lean heavily on the high-flying comps when determining their property value, giving the most weight to the highest, craziest sale outcomes. If a seller is lucky, one or two buyers will go all out for the property and will pay well above what everyone else offers.
This scenario unfortunately doesn’t happen in every instance. Boston condo sellers attempting to replicate their neighbor’s enormous condo sales price may hit a wall, if they aren’t willing to accept anywhere under their list price.
Boston condo sellers in this case tend to be in the “I’ll sell if I can get that price” camp, and may or may not end up coming to terms with market value. The advantage for the buyer is that he or she can simply pay the list price and not have to compete in a multiple-offer situation. Everyone cuts to the chase, in other words.
Updated: Boston Real Estate Blog 2025
