What’s going on with Boston condo prices?
Boston Condos for Sale and Apartments for Rent
What’s going on with Boston condo prices?
As more proprietors persist in possessing their abodes, residential property prices regionally and throughout the country have hit a maximum, but it is accompanied with an expense. With a lesser amount of homeowners putting up their homes for sale, the shortage of inventories has been exacerbated.
Despite the difficulty of obtaining a home due to limited supplies and cost, purchasers are still signing on the dotted line this springtime, noted Jeff Tucker, chief economist at Zillow. Historically, buyers usually back off during the summer months, and it appears that is starting to happen too; nevertheless, substantial price decreases are improbable until more houses go up for sale.
The latest Zillow report revealed that home prices in the United States increased 1.4% from May to June, climbing above $350,000 for the first time ever and registering a new record. This marks four consecutive months of growth.
Zillow’s June home value index revealed that Boston’s home value was $658,657, which saw a 1.8% increase compared to the previous month.
Inventory continues to decrease
Despite the appreciation in real estate prices, there was a 28% decrease in postings in June compared to the same period of time last year.
The study revealed that there were only 376,500 fresh listings available in June, which is a much lower number than the usual 505,100 observed in that month according to previous years’ Zillow data stretching back to 2018. This quantity of new stock is more comparable to the rate seen in the slowest months like February or October.
In the Boston area, new stock decreased by 39.5% from June 2022, while overall inventory dropped by 36.8%.
Home loan interest rates becoming increasingly more costly have limited new real estate listings. Currently, the percentage is 6.8%, the highest point since November and a stark contrast from 5.1% or even 3% of two years prior. The price augmentation keeps a lot of homeowners from relocating, according to Zillow, but it’s not the sole motivation. The steadier rise in residential property prices from the beginning of the year shows that certain property owners might be seeking greater returns.
In the Boston area, June’s average mortgage payment was $3,387, an increase of 84.4% from the prior year.
Tucker suggested that some property holders may have been biding their time until local prices reached record highs before deciding to sell off their assets.
In June of this year, the quantity of residences on the market is less than any other June since 2018, a decrease of 10% compared to the preceding year and 45% when compared to June 2019.
Updated: Boston Real Estate Blog 2023
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Many analysts projected Boston condos for sale price appreciation would slow dramatically in the fall of 2021 and then continue to soften throughout 2022. So far, that hasn’t happened. The major price indices are all revealing ongoing double-digit price appreciation. Here’s a look at their reports on year-over-year price appreciation for December:
- Federal Housing Finance Agency (FHFA): 17.6%
- S&P Case-Shiller: 18.8%
- CoreLogic: 18.5%
To show that they’re not seeing signs of softening in the housing market below is a graph that gives the progression of all three indices for each month of 2021.
As the graph above reveals, last year, home price appreciation accelerated dramatically from January to July according to all three indices. Then, it began to decelerate in August when prices appreciated at a slower pace, but it didn’t decline. Many thought that would be the beginning of a rapid slowdown in the level of home price appreciation, but as the data shows, that wasn’t the case. Instead, prices began to level off for a few months before two of the three indices saw appreciation re-accelerate again in December.
To clarify, deceleration is not the same as depreciation. Acceleration means prices rise at a greater year-over-year pace than the previous month. Deceleration means home values continue to rise but at a slower pace of year-over-year appreciation. Depreciation means prices drop below current values. No one is forecasting that to happen.
In fact, the FHFA revealed that price appreciation accelerated in December in six of the nine regions it tracks. Case Shiller showed that appreciation accelerated in 15 of the 20 metros they report on. As Selma Hepp, Deputy Chief Economist at CoreLogic, explains:
“After some signs of slowing home price growth . . . monthly price growth re-accelerated again, indicating home buyers have not yet thrown in the towel.”
What Does This Mean for You as a Boston condo buyers?
Whether you’re a first-time Boston condo buyer or someone looking to sell your current home and buy a home that better fits your needs, waiting to decide what to do will cost you in two ways:
- Mortgage rates are forecast to rise this year.
- Home prices should continue to appreciate at double-digit levels for some time.
If you wait, rising mortgage rates and high home price appreciation will have a dramatic impact on your monthly mortgage payment.
Boston Condos for Sale and the Bottom Line
Maybe the best thing to do is listen to the advice of Len Kiefer, Deputy Chief Economist at Freddie Mac:
“If you’re thinking about waiting until next year and that maybe rates are higher, but you’ll get a deal on prices – well that’s risky. It may be more advantageous to purchase this year relative to waiting until 2023 at this time.
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Boston Condos for Sale
What’s going on with Boston condo prices?
The number of sales, as well as the price of single-family homes and condos, continued to rise in the Boston area last month.
April was the eighth consecutive month of home and condo sales growth, as the median price rose to a record high on top of low inventory levels, according the Greater Boston Association of Realtors’ latest report.
GBAR officials attributed the increased market activity and consumer confidence to strong first-time homebuyer demand, existing homeowners looking for more living space, availability of COVID vaccines and the broader re-opening of the economy.
Last month, single-family home sales rose 12.2% from 897 homes in April 2020 to 1,006 homes, according to the report — the second-highest sales total for the month of April and a 24.5% gain over the 808 homes sold in March.
Condo sales rose more sharply, setting a new record for the month with a 60.3% annual increase to 1,220 transactions, compared to 761 in April 2020. Sales were up 12% from March.
“April’s sales data demonstrates just how frenzied our market has become,” GBAR President Dino Confalone, an agent with Gibson Sotheby’s International Realty in Cambridge, said in a press release. “We’re still living with a pandemic, listings are in short supply, and prices have never been higher. Yet we’ve never experienced a busier April. There seems to be an almost insatiable demand for housing across our region, and it’s being driven by record-low mortgage rates, a desire by many to seek out larger homes in the suburbs and strong demographics as lots of millennials are looking to buy their first home.”
As sales continue to grow, so does the demand, and that’s keeping median selling prices high.
The single-family home median price increased 15.9% to $765,000 from $660,000 last year.
The median sales price for condos had a 2.8% increase over the past year to a record high of $622,100 from $604,915 last year.
Boston Condos for Sale
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According to CoreLogic’s latest Home Price Insights Report, national home prices in August were up 5.5% from August 2017. This marks the first time since June 2016 that home prices did not appreciate by at least 6.0% year-over-year.
CoreLogic’s Chief Economist Frank Nothaft gave some insight into this change,
“The rise in mortgage rates this summer to their highest level in seven years has made it more difficult for potential buyers to afford a home. The slackening in demand is reflected in the slowing of national appreciation, as illustrated in the CoreLogic Home Price Index.
National appreciation in August was the slowest in nearly two years, and we expect appreciation to slow further in the coming year.”
One of the major factors that has driven prices to accelerate at a pace of between 6-7% over the past two years was the lack of inventory available for sale in many areas of the country. This made houses a prized commodity which forced many buyers into bidding wars and drove prices even higher.
According to the National Association of Realtors’ (NAR) latest Existing Home Sales Report, we are starting to see more inventory come to market over the last few months. This, paired with patient buyers who are willing to wait to find the right homes, is creating a natural environment for price growth to slow.
As the Boston Beacon Hill condo housing market moves closer to a ‘normal market’ with more inventory for buyers to choose from, Boston high rise condo prices will start to appreciate at a more ‘normal’ level, and that’s ok! If you are curious about Boston Beacon Hill condo prices in your area, let’s get together to chat about what’s going on!
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