Boston Homes Come with a Hefty Price Tag, but The Market is Still Booming
The greater Boston housing market is one of the hottest in the country, and it’s only getting hotter.
Like Portland, Oregon, Boston has one of the most expensive housing markets in the country. From February 2020 to February 2021, median single-family home prices increased 5.7% from $614,000 to $648,750. This year-over-year increase is notable; however, it appears that home values actually crested at all-time high of $719,500 in August 2020 before stabilizing at high rates.
A glimpse into Boston’s housing market shows:
- January 2021:
- Single-family home sales hit a record-high with 876 sold – a 13.5% increase from January 2020.
- 185 multifamily were units sold – a 6.9% increase from January 2020.
- February 2021:
- 598 single-family homes were sold – an 8.3% increase from February 2020.
- 110 multifamily units were sold – a 25% increase from February 2020.
The bottom line for anyone planning to buy a house in Boston: the market is worth the investment, but experts expect that Boston’s housing market will be even more expensive as 2021 continues.
Boston’s housing inventory is tight, which is a huge contributor to the increasing home prices. There aren’t enough homes on the market to satisfy the growing demand. That, along with increasing materials prices, is causing prices to skyrocket.
Boston’s inventory of homes for sale fell sharply in February. Compared to February 2020, single-family listings were off by nearly 25%, and overall home listings were down 43%. Demand is high and inventory is low. Boston has a 1.4-month supply of homes, which is slightly lower than the national housing supply of 1.6 months.
Low inventory and high median prices have made Boston’s housing market tough to break into, especially for first-time homebuyers. Bidding wars are becoming more and more common as available homes do come onto the market, and first-time homebuyers are either having to or expand their search outside of the city.
COVID-19 and its accompanying shift toward remote work helped fuel an urban exodus from cities towards popular areas like Cape Cod and the Berkshires. As more and more people made the shift from multifamily housing to single-family rentals, home sales began to reflect that.
Despite a global pandemic, Massachusetts had record year for home buying in 2020. More homes were purchased in 2020 than any other year since 2004. There were 61,469 single-family home sales in 2020 — a 3.9% increase over the sales total of 2019.
As single-family homes were flying off the market at record pace, Boston also saw a robust increase in housing starts, despite an overall decrease in permits in 2020. The beginning of 2021 brought with it a steady increase of permits for new construction starts.
Single-family and multifamily permits exceeded the number experts expected. In February, 412 single-family permits were issued – about 100 more than expected. Nearly 850 multifamily permits were issued in February – more than 200 over what was predicted.
This is good news for investors. Boston is forecasted to increase the number of single-family permits, which could help cut into the low housing inventory. The increase in multifamily permits could also be an indicator of more apartment dwellers searching for an upgrade to bigger spaces after being forced to live and work in tight quarters.
Like most major cities, COVID-19 fractured Boston in a lot of ways. Dismal unemployment rates led to apartment vacancies and stalled construction projects, which created some serious challenges for investors.
As with the Red Sox’s epic comeback in 2004, Boston is poised to rebound. The tight housing market shows there’s a high demand for living in Boston, though investors might have to just be a little patient with breaking into the real estate market.
While inventory might be harder to find, real estate investors with strong strategies can still profit. So it’s more important than ever to have a real estate team that helps you close properties quickly and certainly, and run your construction or rehab projects smoothly. That’s what Lima One Capital provides real estate investors in Boston, Massachusetts, and around the country. Get started today and let Lima One supercharge your investment success.