The Boston housing market may have experienced a temporary slowdown in sales, but it remains a competitive and resilient market. The lack of available listings continues to drive prices to record highs, making it an advantageous time for sellers. As buyer interest remains steady, real estate professionals need to stay vigilant and adapt their strategies to navigate the market successfully.
The housing market data provided by the GBAR serves as a valuable resource for real estate agents and brokers, allowing them to make informed decisions and provide crucial insights to their clients in this ever-changing landscape.
ALSO READ: Massachusetts Housing Market Forecast 2023
Current Boston Housing Market Trends 2023
In October, the Greater Boston housing market witnessed a notable decline in the sales of both single-family homes and condominiums. This dip marked the lowest October sales in twelve years, attributed to the persistent challenge of limited property listings. The Federal Reserve’s decision to raise mortgage rates over the summer, coupled with a three-month decline in consumer confidence, contributed to a reluctance among both buyers and sellers to participate in the housing market.
Single-Family Homes and Condos Sales Statistics
- Single-family home sales: Decreased by 12.6% YoY, from 895 homes in October 2022 to 782 in October 2023.
- Condominium sales: Dropped by 10.8% YoY, from 762 condos in October 2022 to 680 in October 2023.
- October 2011 Comparison: This was the slowest October for sales since 2011.
Market Analysis and Influencing Factors
The housing market has been impacted by higher mortgage rates, rising home prices, and increased competition due to the scarcity of available properties. The report from the Greater Boston Association of Realtors® (GBAR) highlights a 17-month decline in single-family home sales and a 23-month consecutive drop in condominium sales. Despite the challenges, there has been a modest uptick in market activity following an influx of new listings post-Labor Day.
Rising Prices Amidst Limited Inventory
Although economic factors have weighed on the market, the demand for homes continues to outpace supply, leading to strong home values. Median selling prices for both single-family homes and condominiums reached record highs in October.
- Single-family home median price: Increased by 10.8% YoY, from $749,000 in October 2022 to $829,950 in October 2023.
- Condominium median price: Improved by 13.7% YoY, from $611,250 in October 2022 to $694,812 in October 2023.
Market Dynamics and Seller Advantage
The scarcity of listings continues to give sellers the upper hand, with homes often selling at or above their asking prices. The sold-to-list price ratio has exceeded 100% for seven consecutive months. However, caution is advised for sellers who may be overpricing their properties, especially in the current high-interest rate environment.
Price Adjustments and Near-Term Softening
Recent data indicates a near-term softening of prices, with median prices down modestly from their summer peak. Single-family home median prices have declined for three consecutive months, and condominium prices have remained mostly flat.
- Single-family home median price decline: 2.4% in October from $849,950 in September.
- Condominium median price increase: 0.8% in October from $689,000 in September.
Inventory and Market Outlook
The inventory of homes and condos for sale has remained at a 2-3 month supply, indicating a less than ideal situation. Active listings have decreased significantly, and new listings have seen a decline. As the holiday season approaches, sales are expected to naturally slow, providing buyers with a slightly increased opportunity to negotiate, albeit in a still competitive market.
Inventory Statistics
- Single-family home active listings: Decreased nearly 20% YoY.
- Condo active listings: Down 10% YoY.
- New listings: Fell 11% for single-family homes and increased 0.9% for condos YoY.
Market Characterization: Buyer’s or Seller’s Market?
The current state of the Greater Boston housing market leans towards a seller’s market due to limited inventory, increased demand, and the ability of sellers to achieve or surpass their asking prices.
Home Price Trends: Are Prices Dropping?
While the overall trend in recent months has seen steady price gains, there are indications of near-term softening, with modest declines in median prices. However, these adjustments are seen as part of the market dynamics and are not indicative of a widespread drop in home prices.
Boston Rental Market Trends
The Zumper Boston Metro Area Report analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Massachusetts one bedroom median rent was $2,255 last month. Boston & Cambridge were tied for the most expensive city in the metro with one-bedrooms both priced at $2,990 while Brockton was the most affordable city with one-bedrooms priced at $1,450.
The Fastest Growing Cities For Rents in Boston Metro Area (Y/Y%)
- Worcester had the fastest growing rent, up 20.8% since this time last year.
- Everett saw rent climb 20%, making it second.
- Salem was third with rent increasing 19.5%.
The Fastest Growing Cities For Rents in Boston Metro Area (M/M%)
- Salem rent had the largest monthly growth rate, up 5.9%.
- Haverhill saw rent increase 5.8% last month, making it second.
- Brookline had the third largest rent price growth rate, climbing 3.5%.
Boston Housing Market Forecast 2023-2024
What are the Boston real estate market predictions? According to Zillow, as of October 31, 2023, the average home value in the Boston-Cambridge-Newton area stands at $654,034, reflecting a robust 5.4% increase over the past year. Properties in this region typically go to pending status within an impressive 8 days, showcasing the dynamic nature of the real estate market.
One-Year Market Forecast
Zillow’s market forecast for the Boston-Cambridge-Newton housing market indicates a slight contraction with a -1.6% change projected for the year ending October 31, 2023. This forecast suggests a potential adjustment in the market conditions over the coming year.
Inventory and Listings
The available inventory as of October 31, 2023, reveals a total of 7,985 homes for sale, with 3,857 new listings during the same period. This data underscores the ongoing activity in the market and the continuous influx of new properties.
Sale and List Prices
- Median Sale Price (September 30, 2023): $651,667
- Median List Price (October 31, 2023): $753,100
Sale-to-List Ratio and Market Dynamics
The median sale-to-list ratio as of September 30, 2023, stands at 1.015, indicative of a market where properties are generally selling close to or slightly above their listed prices. This ratio reflects a competitive environment where sellers have a good chance of realizing their asking prices.
Market Trends and Price Percentages
- Percent of Sales Over List Price (September 30, 2023): 61.2%
- Percent of Sales Under List Price (September 30, 2023): 29.2%
Market Stability: Will the Boston Housing Market Crash?
The current data and Zillow’s forecast suggest a measured adjustment rather than an imminent crash in the Boston housing market. While the one-year forecast reflects a -1.6% change, it’s essential to consider this within the context of the market’s overall resilience and the consistent demand for properties in the region.
Boston Real Estate Investment: Should You Invest in Boston?
Successfully investing in real estate — whether you are in Boston or anywhere else in the world — is all about correctly timing the market. Knowing when to enter the real estate market can often be a bit of a challenge. Should you invest in Boston real estate? Is Boston a Good Place For Real Estate Investment? Many real estate investors have asked themselves if buying a property in Boston is a good investment. You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers.
Boston is a fairly walkable city in Suffolk County with a population of approximately 700,000 people, making the Boston housing market rather large on its own. It is a thriving city, which makes it the best location to buy an investment property at any point in time including the present. Since it contains around 80% of all residents of Massachusetts, it is certainly the first place that people choose to research, when they want to invest in the state.
The broader Boston Metropolitan Area or Greater Boston is home to more than four million people. Boston real estate has been one of the best long-term real estate investments in the nation. The Boston real estate market is dominated by rental properties and Airbnb is a great pick for starters. The city is a wonderful place to call home. People want to live in the city, yet the number of new homes being built is relatively low.
Boston’s real estate market is vibrant, and plenty of buyers are offering more than the asking price when they love a property. Throughout the Greater area of Boston, numerous investment properties are waiting to be revitalized by a wise investor. But for most people, Boston is a high-priced real estate market, though it isn’t as expensive as Washington DC, San Francisco, or New York City.
Greater Boston is still an expensive place to buy a house, but the years of relentless price increases may be nearing an end. It’s too soon to know if this trend is a blip or if the Boston housing market heading toward some stability. However, new investors should always consider cheaper markets for investment. Because of the large number of students, and college and university faculty, it is a no-brainer for savvy investors to invest in a rental property in Boston.
Rental property in Boston is guaranteed to get a lot of demand from tenants – whether an apartment or a condo or a single-family home. Any investment property is likely to get rented out fast. Airbnb rentals are one of the best options for real estate investment in Boston. Let’s find out more about it.
Boston has been one of the hottest real estate markets in the country for many years. It is not just an expensive real estate market on the East Coast. It is one of the few in the region not expected to see significant declines. And there are areas we can expect to see significant appreciation due to the sheer demand for affordable housing with easy access to major arteries or public transit.
Boston is an old, East Coast city. We’ve already mentioned the height law and the challenges faced by getting anything approved even with the mayor behind it. Unfortunately, Boston’s entrenched bureaucracy limits the redevelopment of large garages and other major projects that could bring thousands of units to the Boston real estate market.
If it takes ten years (or more) for the Boston Harbor Garage to be redeveloped, and it is far from the only project on hold, then you can be certain to see high returns on any redevelopment project that creates more housing units within existing buildings. Whether this is converting warehouses into lofts or single-family homes into multi-family housing, if you don’t face major roadblocks, you’ll see a great return on the investment.
If you are looking to make a profit, you don’t want to buy the most expensive property on the Boston real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Boston that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.
Investing in Boston real estate will fetch you good returns in the long term as the home prices in Boston have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Boston real estate market which can help investors who are keen to buy an investment property in this city.
Boston is Attractive to Millennials
Millennials are a market real estate agents want to cater to since they’re buying homes in mass. And Boston is considered one of the cities Millennials love. The challenge for Millennials is affording a market where the median home costs around $740,000. Yet the demand from young and old alike means there’s very little inventory, much less housing stock considered affordable.
Boston isn’t just attracting young people from across the country – it is also attracting immigration from around the world. The city has seen population growth every year since 2004 in part because of the influx of immigrants attracted to healthcare, biotech, and educational jobs here.
Millennials and older adults alike are choosing to spend more on an apartment, condo, or house to avoid spending hours each week commuting. It is seen as an investment in their quality of life. This explains why downtown Boston is seeing price increases far higher than the rest of the Boston metro area.
Downtown enclaves sell for much more per square foot than properties at the edge of town or in the suburbs; the price hit a thousand dollars a square foot recently. That’s expensive for the U.S. but half the price you’d pay for a comparable apartment in New York City. Ironically, the high price of real estate in NYC explains why many financial firms are expanding in the relatively cheaper city of Boston, home of the mutual fund.
Boston’s Job Market Will Keep People Coming
Boston was ranked the best city in the U.S. for startups. A large number of world-class universities provide a large number of skilled workers, many of whom work in medicine, finance, and biotech. The constant creation of new jobs will continue to attract residents and help the city retain the ones it already has. The economy is dominated by services, which usually pay high wages and attract more and more job seekers. All these factors have created a hot housing market in Boston, dictated by both home buyers and tenants.
Guaranteed Real Estate Appreciation
Strong demand plus limited inventory and limited space to grow will guarantee appreciation of any property you buy in the Boston real estate market. Prices are going to appreciate in 2021 by 6-8%. This is only a continuation of the steady property increases seen since the 2008 property crash. This is partly because the market is so built-up already that land prices are high.
Then there’s the fact it can take a long time to get approval to build up. Boston’s mayor is facing flak for wanting to waive the building height rule just once. Ironically, the Boston shadow law that limits the height of buildings in the Boston housing market has the greatest impact on the downtown areas where people most want to see the tall apartment and condo towers built.
The increase in mortgage interest rates is putting pressure on home buyers, limiting what they can afford. This in turn is leading home builders to cut prices on new properties. According to the Washington Post, Boston home builders are cutting the price of properties on the market by 6%. If you have financing or the cash to invest in the Boston real estate market, you can’t pass up a deal like this.
Boston’s Rental Market
The Boston real estate market and its environs include a whopping hundred universities, colleges, and trade schools. There are more than 150,000 college students in Boston and Cambridge alone. You could buy properties across the Boston real estate market and cater to students, and your market is so diverse that you’ll always see demand. Boston is landlord-friendly compared to markets like NYC. There is no limit on late fees.
You don’t have to provide notice before entering the apartment. The state doesn’t require rental licenses to become a landlord. There aren’t laws regarding re-keying or pets. A written rental agreement is only mandatory if your tenant is staying for more than 12 months. Evictions are allowed if they are not paying the rent, violating the lease, or breaking the law. You can start evictions two weeks after the non-payment of rent. Since evictions can take weeks, screen tenants well for any property in the Boston housing market.
Rents in the inner Boston Core hit 2800 a month. All those grad students, young single professionals, and highly paid power couples are bidding up the limited housing stock available. If you can find a reasonably affordable property in the Boston real estate market and convert it into multiple units or a more upscale clientele, you’ll enjoy significant cash flow from the property. Any future real estate investor in Boston should also have in mind that the expected rental income for both traditional rentals and Airbnb rentals is high.
The combined effect of high property prices and high rental income leads to a decent return on investment for Boston rental properties. The taxes here are high compared to the U.S. average but lower than in several other states in the area. The income tax rate is much lower than in New York, and property taxes are far lower than in New Jersey. Therefore, you’ll clear more here than in some of the other large Northeast markets.
Luckily for real estate investors in Boston who are interested in Airbnb rentals, they are fully legal in the Boston real estate market and are not even taxed at the moment. Recent discussions among Massachusetts lawmakers failed to result in an agreement on taxes to be charged on short-term rentals.
Latest Rental Market Statistics: According to RENTCafe, 51% of the households in Boston are renter-occupied, which is a significant population. More than 95% of the apartments fall in the range of $2,000 or more, which shows how high are the rents in Boston. As a rental property investor, it should be on your list of due diligence. Do the math and find out the best neighborhood & property that suits your investment goals.
The average size for a Boston, MA apartment is 812 square feet with studio apartments being the smallest and most affordable. 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage.
As of December 2023, the average rent for a 1-bedroom apartment in Boston, MA is currently $3,000. This is a 0% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Boston decreased by -3% to $2,500. The average rent for a 1-bedroom apartment remained flat, and the average rent for a 2-bedroom apartment remained flat.
- Two-bedroom apartment rents average $3,500 (a 0% increase from last year).
- Three-bedroom apartment rents average $3,900 (a 3% increase from last year).
- Four-bedroom apartment rents average $4,900 (a 7% increase from last year).
Here are the ten neighborhoods in Boston having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- Roxbury Northeast
- Washington Park
- Central Square
- Central Maverick Square Paris Street
- East Boston
- Harbor View Orient Heights East
- Jeffries Point
- Roxbury Northwest
- Harbor View Orient Heights West
- Roxbury East
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Boston.
References
Market Data, Reports & Forecasts
https://www.gbreb.com/
https://www.gbreb.com/GBAR/Housing-Market-Data/
https://www.zillow.com/boston-ma/home-values
https://www.realtor.com/realestateandhomes-search/Boston_MA/overview
https://boston.curbed.com/boston-market-reports
https://www.bostonmagazine.com/property/2018/01/24/boston-zillow-housing-crisis
Pre-COVID stats
https://www.bostonmagazine.com/property/2019/01/31/expensive-housing-market/
https://www.bostonmagazine.com/property/2020/03/16/boston-home-prices-doubled/
https://www.redfin.com/city/1826/MA/Boston/housing-market
Landlord friendly & Rental Statistics
https://www.avail.co/education/laws/massachusetts-landlord-tenant-law
https://www.rentcafe.com/blog/renting/states-best-worst-laws-renters
https://www.rentjungle.com/average-rent-in-boston-rent-trends/
https://www.rentcafe.com/average-rent-market-trends/us/ma/boston/
Reasons to Invest
https://nextcity.org/daily/entry/boston-mayor-waive-building-height-rule-park
https://www.fool.com/taxes/2017/10/09/7-states-with-the-highest-income-tax.aspx
https://www.bostonmagazine.com/property/2018/05/30/boston-renting-crisis
http://charlesgaterealty.com/2018/11/29/boston-strong-the-fast-growing-boston-housing-market
https://www.forbes.com/sites/ellenparis/2018/01/29/2018s-housing-market-looks-good-unless-youre-a-first-time-millennial-buyer/#78138a011885
Bureaucracy
https://boston.curbed.com/boston-development/2018/2/22/17037854/boston-building-height-limit
The Best Neighborhoods for Boston Real Estate Investment
https://www.bostonmagazine.com/property/2020/03/16/boston-home-prices-doubled/
https://boston.curbed.com/boston-development/2020/1/7/21051943/boston-neighborhoods-to-watch
https://www.boston.com/news/local-news-2/2020/07/09/boston-ranked-third-most-gentrified-city
https://www.bostonglobe.com/2020/07/27/business/plans-major-project-along-fort-point-channel-are-moving-ahead/
