2022 predictions for the Boston condo market
What’s the future of Boston real estate for 2022?
Trying to predict what will happen in the residential real estate market in 2022 is a bit like trying to forecast the weather months in advance, but while the future of home sales and development has become increasingly unforeseeable, real estate professionals continue the work of advocating for their clients.
Bennett: Industry experts agree that we are in the midst of a real estate boom, and the current state of the market shows no signs of this slowing down in 2022. In fact, international real estate investors that dropped off slightly during the pandemic are expected to rise in the coming months as travel restrictions due to the pandemic begin to ease. In addition, the unprecedented flexibility brought on by remote work and schooling will encourage millions of homeowners across the United States to rethink how and where they live and move to places that best fit their needs.
Lamacchia: Yes, there is no doubt in my mind that it will be a very strong year, and home sales will likely reach an all-time high. We have a mix of extremely high demand, and we are going to see more supply in 2022. That will make a big difference.
Barry: We believe the 2022 market will continue to be strong for several reasons. Buyer demand is still outpacing inventory. Interest rates are still low. Companies are welcoming employees back to their offices, and this will cause people to want to move closer to the office to shorten their commutes. Household formation is still predicted to be at its peak for millennials for the next several years.
Rainis: Yes, especially in Boston which continues to be one of the hottest markets in the world based on the educational, tech, medical, and life sciences sectors. New development in all major markets (Boston, Florida, New York, Texas, California) will continue to bring much-needed inventory to market as savvy investors and locals are taking advantage of low borrowing rates. If lenders continue to be competitive with rates, home buying and financing will not be a hassle for buyers and will keep the positive home buying momentum going.
Warren: I’m excited about the 2022 real estate market, especially in Boston. The demand for condos has increased throughout the year, and I expect that trend to continue.
Raveis: Look ahead and plan. Don’t sit back. Our sales associates with the most success are continually investing back into their business – no matter what the market conditions are. Write a business plan, connect with your spheres of influence, develop marketing strategies, plan open houses, send direct mail, use your technology, photography and video. Use all the tools in your toolbox. Invest and reinvest portions of your income back into your business, and you will see results.
What changes have you made to the way you do business since the onset of the pandemic, and what changes do you anticipate making in the coming year?
Rainis: Flexibility has been key for Elliman in being able to provide support both locally, nationally and corporately to our agents. Our agents were able to pivot to suburban markets and our Elliman Nationwide referral business has never been busier and we will continue to see this as more cities open up and will continue to do so in 2022. I am THRILLED agents are back in the office. Communicating and collaborating with a true sense of camaraderie. This is what Elliman Massachusetts is all about and will continue in 2022.
Lamacchia: We are utilizing Zoom and Microsoft Teams a lot more than we did prior to the pandemic.
Warren: One of the biggest changes that all of us have made is being comfortable working remotely and communicating virtually. Prior to the pandemic, I can’t remember a single virtual meeting where everyone had their cameras turned on, but now we have all grown comfortable with being on video which I think will lend itself to agents being more comfortable on platforms like social media, etc.
Barry: The things that changed in our business during the pandemic mostly surround ramping up the adoption of tech tools in a very short period of time. This allowed clients to engage in buying and selling remotely, more safely and sometimes purchasing sight-unseen. Fortunately, our team was already using high-resolution images, video, and virtual tours, allowing potential buyers the ability to experience a home without ever leaving the comfort of their own. From a computer or mobile device, buyers can immerse themselves in our properties online. We were also using digital transaction management, including e-signature, ensuring necessary documents could be securely completed electronically whenever possible, as well as best-in-class buyer search tools and digital marketing campaigns. So, we were as prepared as a firm could be for the world we were plunged into.
What has not changed is that this is primarily an advisory service — real estate agents have and will continue to guide their clients on the process, market intel, negotiation, marketing, and more. That has not changed, but the ways in which we do that have changed. More of that is being done via Zoom or FaceTime calls.
Lamacchia: The No. 1 thing agents can do to succeed is to truly understand the fears that sellers who want to buy a new home are feeling. If agents had a better understanding of that and a better understanding of how to utilize both contingencies and disclosure, we would see more inventory coming on the market. The lack of knowledge and ability to explain that to home sellers is part of the reason inventory went as low as it did in the last 12 months.
Warren: The core strategies agents use to build their business haven’t really changed. It is all about creating and nurturing relationships. The more conversations an agent has, the more opportunities they create. New technology and platforms simply provide a more efficient way to create opportunities to have those conversations.
D’Amico: In any market successful agents become and remain successful by sticking to the basics of prospecting, networking, and growing their sphere of influence. Agents also need to stay educated on the market, because it matters. Buyers and sellers need more guidance now than ever before. Buyers need to understand the market factors of the community they are buying in, as well as successful trends in getting their offers to stand out and be accepted. Sellers also need the educated agent to provide valuable advice as to listing price, marketing, staging, and repairs needed for their home to net the best possible price. The competition in our industry continues to grow. We all need to be focused on our clients and success will follow.
Barry: Agents will need to continue to shift their advice and processes with the shifting market. Agents will need to be alerting customers and clients to market shifts, and to what they can do to adapt to them. This will mean providing the most relevant advice on the current direction of your market, as well as adjacent, feeder and “leading” markets. As markets change, you want to be out ahead of it — not behind it.
Rainis: NETWORK. NETWORK. NETWORK. Take advantage of all social opportunities. Family, friends, neighbors. They are all potential clients. Communicate and collaborate with your colleagues especially about off-market properties where you can save your buyer the multiple-offer frenzy.
Bennett: At Coldwell Banker, we believe that there are no shortcuts to reaching success as a real estate agent, and today’s market revolves around endurance, consistency, and persistence. Despite the unprecedented challenges the industry is facing, agents need to continue leading with honesty and integrity. This is truly the only way to build organic relationships with clients, which is one of our most valuable assets as real estate professionals.
Raveis: The city is stronger than ever with record-breaking sales in the Back Bay, Beacon Hill, and the Seaport. South Boston continues to boom and is the favorite for post-college, high-income earners interested in a return to restaurants, bars, and outdoor cafe options now that many employers have welcomed them back to the office. The Inner ring suburbs are as popular as ever and are also seeing record-breaking deals in Winchester, Belmont, Newton, and Milton.
Rainis: Seaport: Retail. Eateries. Vibrant Corporations. Waterfront. Theater District: Elliman is the exclusive marketing firm for The Parker. Boston’s newest development. Luxury product in a central location. Beacon Hill: Boston’s hidden jewel. Quiet, sophisticated and have you been to Charles Street lately! The new shops and eateries are all back to life. Back Bay: the epitome of Boston living.
Bennett: A list of hot neighborhoods in Boston would not be complete without mentioning the Seaport District. It’s such a vibrant area that offers a unique mix of work opportunities and lifestyle experiences. With new residential construction and continued work opportunities, we can expect this to continue into the new year. In addition, East Boston has grown in popularity over the past year or so. While the neighborhood has flown under the radar in the past, rising prices in the city have encouraged many to realize the value they can get for their money in the area. Of course, Boston’s Back Bay, South End and Beacon Hill are steadfast neighborhoods that will continue to attract buyers.
Barry: We anticipate that there will be several market hot spots — but the highlight will be the metro markets and near-burbs. As companies invite their employees back to the office, we will see some buyers choose locations closer to their workplaces to shorten their commutes.
Warren: The Seaport district has and will be one of the most talked-about neighborhoods in Boston. It seems like a new building is popping up every month down there, along with outstanding retail and restaurant/nightlife. The other neighborhood that I am excited about is East Boston. We’ve seen the Waterfront start to be developed and new restaurants opening over the last few years.
Bennett: In 2022, we’ll continue to see a focus on products that make it easier for clients to engage with agents and have a seamless buying and selling experience. From big data, which has helped agents price properties and identify likely buyers for a property, to the rise of virtual tours stemming from the pandemic, innovative tools will continue to ramp up as agents look for ways to build an advantage in today’s competitive market. At Coldwell Banker, we are also leveraging technology to create more of a seller-focused website for the year ahead.
Barry: We anticipate a continued effort to improve the home buying and selling process. How that is done will be with technology, search apps, marketing tools, and remote transaction management. Companies and agents also need to be diligent in implementing cybersecurity measures — both in technology, and communication with clients and customers. Fraud attempts are on the rise around the world, and we all need to be aware of what they may look like and how to protect our agents and clients from them.
Rainis: We are all anxiously awaiting “the next best” social media platform. Elliman has just launched their new marketing and transaction platform which has been well received by our agents nationwide.
Warren: I think we will see more investment-end products that make an agent’s job more efficient. Any new technology that I look at makes my agent’s lives easier, or I’m simply not interested.
What growth do you expect for your company next year? Do you expect your business to thrive, decline or remain stable? Why?
Warren: We focus on partnering with our agents and working with them to build the business and life they want to have. We don’t simply hand them a few pieces of software and say, “Good luck.” We spend time getting to know them, figuring out their personality types, and identifying their strengths and weaknesses. Then we take the time to develop a business plan together and help hold them accountable to their commitments. This philosophy leads to increased production for our existing agents and generates many conversations with other successful agents in the Boston market looking for more out of their current brokerage. The combined internal productivity and recruitment of the right agents should allow our business to continue to thrive in 2022 and beyond.
Lamacchia: We expect to have at least 50% growth in 2022.
Barry: We expect the market to continue to thrive but at a more tempered pace. This should be seen as a positive, as a balanced market is more sustainable. Our affiliation with Sotheby’s International Realty enables us to meet and exceed the needs of our clients while presenting our properties to a global audience, and we have plans for continued growth here at home in 2022. Over the last five years, we have reinforced our presence in existing markets and strategically expanded into key feeder markets in an effort to help our agents better serve their clients as they move throughout Massachusetts. Our 24 office locations in the varied urban, suburban and coastal markets amplify the reach of our properties and enable our agents to work collectively across the state to find qualified buyers for their listings.
Rainis: THRIVE!!!! EXPANSION and NEW DEVELOPMENT for Elliman!
Are you seeing continued migration to the suburbs, or is that beginning to reverse? What does it mean for sales?
Barry: A major real estate story of the past year has been the movement of buyers from our cities to our suburbs, prompted by the pandemic to leave behind small spaces and crowds. Tight inventory in regions like the MetroWest and Greater Boston suburbs sent home prices there soaring, making it the strongest market our associates in those regions have seen in decades.
But now, with more Americans vaccinated and cities reopening, we anticipate a shift in demand back to urban areas and that there will be more energy around the metro markets than there has been in the last two years. This will be partial because of companies reopening their offices to employees and partially because of city businesses returning many pre-pandemic services and amenities. What remains to be seen is whether or not a significant percentage of companies or employees will retain more remote schedules. It is possible that some companies will never return to their pre-pandemic office usage.
Rainis: We started seeing a reversal this past summer with our clients wanting to come back into the city. City conveniences (one-floor living) and social interaction are driving forces. The current suburban migration is not due to the urban “panic” caused by the pandemic, but individuals wanting and appreciating a quiet/private lifestyle for themselves or growing families. Sales will continue to increase with the need for second/third homes. This market is still on the rise especially in the Cape and Islands and Florida.
Raveis: Though low inventory has slowed the recent migration to the suburbs, there are still buyers who can not resist when they find the ideal property and they jump on it. Buyers always have a list of must-haves, like schools, location and amenities, but those with greater flexibility are having more success. Also, many empty nesters have restarted their searches downtown, post-COVID, translating to record-setting prices in the more urban areas.
Warren: The rush to the suburbs was somewhat of a knee-jerk reaction to a terrifying situation. However, once the vaccine rolled out and there was a light at the end of the tunnel, we saw an immediate uptick in buyer activity in downtown Boston. As restaurants, shops, nightlife began to open back up, that activity continued to increase. I think 2022 will be a more balanced market for people moving in and out of the city.
Bennett: A report our company recently published found that many U.S. cities are beginning to see a major return to urban areas. In fact, Boston was among the top cities that showed the most resilience to this migration in 2021. For the city’s luxury market in particular, we did not see the dramatic dips that other cities did, and sales mostly stabilized by 2020. Boston is now on pace to surpass the number of $1–$5 million sales for both 2020 and 2019.
What will be the biggest challenges and opportunities for agents, lenders and brokers in 2022?
Rainis: Agents: Opportunity is the continuation of networking with clients and peers. Stay in touch with past and present clients especially with your rental clients who will eventually purchase. Challenge: Making the time to keep up with steady communication and networking as life is getting busy for all. Lenders: Need to stay competitive and be more creative when possible.
Bennett: The greatest challenge for agents in 2022 will continue to be the lack of inventory. However, I also believe that this competitive market will present one of the greatest opportunities — and that is for agents to truly show their expertise while helping clients navigate these current market conditions. By becoming an invaluable resource during these challenging times, agents will differentiate themselves amongst their competition and create relationships that will last through the years.
Barry: The biggest challenge will be rising interest rates and persistently low inventory levels. It is important to understand that we have not seen a reduction in the number of sales done year to year overall. But, we have increased the number of buyers. We have not yet created new inventory to satisfy that demand. While interest rates have been held at historically low levels, and we can all expect to see them rise only a small amount, this will affect affordability at the entry-level and mid-level markets, where lending is critical to a purchaser’s viability.
Warren: I don’t see too many new challenges to overcome in 2022. If anything, we will be that much further from the turmoil that the pandemic caused, which will hopefully create an even more confident consumer.
Is the work-from-home trend changing the way people are shopping for homes? How are buyer preferences changing beyond wanting more space for a home office?
Warren: The work-from-home trend is undoubtedly changing some buyer preferences. The most significant is that they don’t necessarily need to be close to a specific location for work. We’ve seen this dramatically increase values in places that are a bit more off the beaten path. People have also realized that they can now consider “second home” markets as a potential primary residence.
Bennett: Many consumers looking to buy in this market have more freedom than they’ve ever had. With most workplaces offering either fully remote or hybrid options for workers, many individuals no longer have to live within close proximity to downtown Boston for a daily commute. This has opened a ton of doors for buyers, and we’ve seen families migrate further from the city where housing options are a bit more affordable. Locally, we’ve also worked with developers on a new residential construction project that specifically addresses space for virtual classrooms. As online schooling continues to be a reality for many families, we’ll likely see buyers gravitating toward homes that can address this emerging need as well.
Barry: Yes. The work-from-home trend has certainly affected how consumers shop, including home purchases. While most buyers eventually do visit the homes they intend to purchase, more are beginning that search with a virtual tour. Some are putting in offers sight-unseen. And some don’t see the home before they move in! It has also affected what they are looking for. In addition to at least one office space, they also are looking for more outdoor space to enjoy, as they spend more time at home.
Rainis: A bonus or a “plus” room option and outdoor space are now priority questions agents are asking new buyers prior to beginning searches. Seeing more space used not only for work but for hobbies or even walk-in dressing rooms — “Thank you Bravo housewives.” In the city, the suburban buyer either wants a private brownstone/small association experience or the opposite spectrum being a new development, full-service lifestyle. On-site storage is also trending as a hot preference.
Do you think the number of new people getting real estate licenses will grow in 2022?
Barry: Typically, a strong real estate market drives a spike in new licensees. Surging home prices and the pandemic’s elimination of millions of jobs have persuaded tens of thousands of Americans to try their hands at selling real estate. In most states, it requires taking a course and passing an exam to earn a residential real estate license, so I am a strong believer that Realtors must strategically and creatively drive their business and set themselves apart from the rest.
Rainis: Yes; but be careful what you wish for new agents. This is not an easy industry, especially if you do not have a client network in place or the adequate time (24/7) to dedicate to growing your business… it is not easy. If you are looking for this to be a part-time job, you should think about referring your business out to an experienced agent.
Bennett: I certainly hope so! Something we’re really focused on as a company is advancing diversity across our brand, and we’ve seen more of these important conversations taking place across the industry as a whole. I believe this is going to open many doors for those who previously did not have much representation in the industry and will likely lead to more people considering real estate as a career in 2022.
Warren: Anytime the market is hot and people are talking about real estate, we see a massive uptick in new licensees. Since 2022 will be a solid year for real estate, we should continue to see new licensees grow. It usually takes a downturn in the market to see any kind of exodus of Agents.
What do you see happening with home prices in 2022?
Lamacchia: I think it’s getting back to a sense of normalcy for most markets. However, second-home markets are still very strong. Home prices will undoubtedly increase, but I don’t feel they will as much as we are seeing in 2021.
Barry: Home prices are likely to rise more moderately than in the last two years. This will be largely from rising interest rates.
Rainis: In the city: New development will continue to set pricing records. Demand will continue to be high for a full-service luxury product that offer amenities and conveniences, especially if Boston is a second/third home or investment (turnkey and serviced).
Warren: As long as rates stay stable and there are no major macroeconomic events, I think we will see prices continue to rise at a relatively healthy rate. I don’t think we will see the appreciation that we saw in 2021, though.
Bennett: The 2021 housing market has resulted in more demand than available supply, leading to a lack of inventory in many U.S. regions. With labor and material costs currently prohibiting new construction in many markets as well, this strained supply will likely keep home prices high for the foreseeable future.
What do you expect to see in the mortgage lending industry in 2022?
Murray: Having lived through many of these Fed cycles since I originated my first loan in 1986, I can already see that the loan volume is are starting to slow down a bit. I heard one bond commentator, when asked if these rates will slow the housing market, make the comment, “You mean rates that are still the lowest in 10,000 years?” I am not sure if he was referring to the Mesopotamian Shekel, but his point is correct, even in the mid 3’s, these mortgage rates are still at historic all-time lows. We will still have a strong purchase market heading into next year, but the pool of clients looking to refinance has already diminished and that trend will continue into 2022 as the Fed tapers the purchasing of mortgage-backed securities as well as looks to possible rate hikes in the second half of 2022. Inventory constraints will keep housing prices strong in the Northeast. Homebuyers still greatly outnumber the number of homes being listed for sale and this is likely to continue will into 2022.
Collett: In 2022, we’ll see a continued focus by the industry on growing purchase market share. I expect interest rates to rise, which means refinance activity will fall. We’ll also see lender profit margins get squeezed, which could result in an uptick in consolidation within the industry. I expect the Government Sponsored Enterprises (GSEs including Fannie and Freddie) to focus heavily on affordable housing. In addition, we’ll likely see a slew of new products and energy poured into expanding homeownership opportunities to communities traditionally underserved by the market.
Do you anticipate that your production will go up or down?
Murray: Because a decent percentage if my clientele is referred to me from financial planners, and CPAs looking for my expertise to assist their clients on restructuring their mortgage debt and help free up additional monthly cash flow to help build wealth or plan for future financial needs like college planning or large home improvements, I anticipate that my personal production will drop in 2022. I am looking to expand my team to increase my purchase business as well my financial planner outreach, so I expect 2022 to be another strong origination year.
Will interest rates remain low next year, and what should homebuyers be watching for regarding mortgages?
Collett: While interest rates may move slightly higher, I do believe they will remain at historically low levels, maintaining an advantageous environment for homebuyers. Professionally, I’ve been through about 6-8 rising rates cycles and they always fall short of expectations; I simply don’t think the markets can function on significantly higher rates.
Murray: Rates should have already climbed this year, so anything is possible, I am always reminded of that famous line from the movie Dumb and Dumber, “So you’re saying there is a chance?” The bond market has a habit of moving in the exact opposite direction just when most, if not all, prognosticators think rates will continue to move higher is exactly the time when we start to see rates dip. There is a saying that I have found to be very true and that is: “The cure for higher rates is higher rates.” But in the short-term rates will be pressured by a Fed looking to end this latest round of quantitative easing, that was to the tune of $5 billion in mortgage bond purchases per day, so Fed tapering will need to be offset by a huge demand from overseas buyers to fill that void to keep rates from rising. Our Treasuries are still far more attractive to European bond investors whose only other alternative is a negative yield. So, if we continue to see EU bond-buying coupled with decreasing inflationary pressures and a slowing economy, we may have a chance of keeping these rates at near historic lows.
What will be the most popular loan types?
Murray: In a rising rate environment, we always start to see a reemergence of the longer-term adjustable rates that that are amortized over 30 years but are fixed in for a 7-, 10- or even a 15-year period will become more popular as long as there is at least a half-point spread between those rates and the conventional fixed rate. Since the pandemic hit in March of 2020, the fixed rate products had been priced in the same range as the adjustable rates but just recently, with all the talk of the Fed tapering, we are starting to see enough more of an interest rate spread that will make those longer-term adjustable mortgages a bit more attractive. Especially to those that are soon to be empty nesters or have a job that may require them to relocate in the next five to seven years.
Collett: I think conforming and jumbo 30-year fixed-rate mortgages are here to stay. With a couple of rate hikes expected by the Federal Reserve in 2022, we will likely get a flatter yield curve, which doesn’t bode well for adjustable-rate mortgage products. With tighter profit margins, lower origination volumes and the sharp focus on affordability by the GSEs, we’ll likely see credit widen a bit.
How will tech change for loans in 2022?
Collett: With lower volumes, we’ll probably see additional resources poured into mortgage technology, which we are certainly doing at Guaranteed Rate. Lower profit margins means lenders will have to continue figuring out how reduce the cost to originate a loan. We should see the GSEs focus more heavily on mortgage tech as well; some of those initiatives lost focus under the previous administration, whose goal was to de-risk the agencies and move them out of conservatorship.
Murray: Technology has allowed for us to be able to originate throughout the shutdown without missing a beat, and I know that it will continue to make our lives and that of our clients easier as we continue to improve the application process and customer interface with uploading conditions and e signatures. But we have to be careful as technology cannot replace the importance of an expert mortgage advisor that is key to making sure that a client makes the correct financial decisions. A mortgage instrument is the largest debt that our clients will be facing, and helping pick the correct one is key to a client building wealth or possibly facing financial stress that can lead to disastrous results later in life.
How is your company responding to low inventory?
Gollinger: On all of our new construction developments, when we see scarcity of a particular unit type or stack within a building, we push price. With limited supply and consistent demand you are able to appreciate price points.
How will you deal with supply chain issues next year? Will this continue to be an issue for builders?
Gollinger: Yes and No. Increased costs on the builder’s side will in turn result in higher price points for condominium sales when selling the products. Some of this will not necessarily be noticeable on the buyer’s side, for example increasing a 2-bed unit from $1,050,000 to $1,090,000. That increase would not be a buy-no-buy decision for a buyer (especially on mortgage with rates still being as low as they are). If it is a more extreme example people will weigh the costs against what they are getting for their money, not just for the unit but also the building (i.e amenities, parking, etc.).
How important will agents be to your business in 2022?
Gollinger: Very important. We rely on the brokerage community and they are an integral part of our sales programs for our projects.
What impact will environmental concerns, particularly flooding as a result of global warming, have on the Boston real estate market in 2022?
Murray: Boston is particularly vulnerable to flooding as most of the city was built on a landfill. I have read reports that Boston is looking to raise up its streets and build berms and even require new high rise waterfront condos to have aqua fencing which are portable barriers that can be secured to the pavement to deflect incoming water and storm surge. But, if sea levels continue to rise, I feel that the only true defense may be to retreat inland, something that may not be possible for many of Boston’s coastal communities.
Warren: We have not heard much from buyers about the potential impact of climate change on their property searches… yet. I don’t think that will change much in 2022, but there will be a time soon that buyers will start to make decisions based on the potential impacts of global warming, most notably the potential of flooding from rising sea levels. We are seeing developers build this into their design in many of the new buildings in the seaport already.
Gollinger: As of today, there is very little impact on real estate development and buyer’s perspective. Going into the future, I would anticipate a much larger impact.
The Boston real estate market is eventually going to turn and not be strictly a seller’s market. Do you think that will happen next year? Do you think the market will start to level off next year with more of a balance for both buyers and sellers?
Warren: I think we should see a trend towards a more balanced market develop throughout 2022. There is not enough new construction to dramatically change it overnight, so we will likely still hover somewhere in the two to three months of inventory range, which is considered towards the lower end of a seller’s market and potentially entering a neutral market.
Raveis: Yes, we’re already starting to see signs of leveling off. In many areas, buyers can go home and sleep on it before putting in an offer, but still can not wait too long! Fairly-priced remodeled properties are still commanding a high premium.
Murray: Over the last three decades, I have seen these housing boom cycles work themselves out as the old German proverb correctly states “Trees Don’t Grow to the Sky.” And as rates moderate a bit along with COVID fears, and our work force feels more comfortable leaving their home office, I think we will start to a bit of this pandemic-induced buying decrease. What we will still need to see is the inventory of homes listed for sale to increase a bit and we are just not seeing much in the way of new housing being built in Massachusetts. Most of my move up buyers are not worried that they will sell their current homes, they are worried that they will not be able to find a new home once they do sell and so are reluctant to list their homes unless they plan on moving out of state.
Bennett: While it will eventually turn, the sellers’ market will likely continue into 2022. This year, our company found that around a fifth of homeowners are planning to sell their current home in the next 12 months. While there are a variety of factors that can be attributed to this — from a rebounding economy to new living opportunities brought on by remote work — this seems to be a trend that will continue on into the new year.
Lamacchia: There is no question at some point the market will adjust, but it won’t happen in the next two years because inventory is too low and demand is too high. Beyond two years, I cannot really see but if I had to guess, I would say somewhere between three to four years, we will see a change in the market.
Rainis: No [and] no. Boston has never slowed down with buyers and demand and that will still continue with the growth of the educational, tech, medical and life sciences sectors. Boston is a beautiful and manageable city and Bostonians and newcomers appreciate that; that will never change. You can walk everywhere and it is enjoyable! A new neighborhood, the Seaport, was created, is flourishing and not stopping; how many states has that happened in? Inventory is needed in order to balance the market; luckily Douglas Elliman will be providing that with our future new development opportunities.
Gollinger: I think it depends on the product type and price point. There is still great demand and limited supply for urban core mid luxury. That product type and price point has not been over developed and is much in demand in particular across the millennial and younger demographics.
Beginning in October, we’ve seen more inventory in the Boston market than in recent months. Do you think in 2022 we’ll see even more inventory, and will that help drive down the high prices we’ve seen over the past two years?
Gollinger: At this point, I’m not entirely sure. If people are looking to sell their existing condominiums as a move up buyer, potentially, as a lot of resales paired with new construction would compete. In terms of new construction development, there are not so many projects being built/sold that I think would saturate the market. As I mentioned before certain products and price points are still scarce. I do not see increased inventory driving down prices next year
Murray: I do believe that we will see home prices moderate a bit, but lack of inventory will keep home prices in the Northeast elevated. I also have seen many of my clients looking to purchase second homes, especially now that they realize they do not have to be in their office five days a week. So, I do feel that homes in located in vacation destinations will continue to climb throughout 2022.
Bennett: While there are always slight upticks, inventory remains at historic lows in the Boston market. We can certainly hope that it will, but these upticks are not a reliable indication that we will see home prices decrease in 2022.
Lamacchia: Yes, every October is the peak for total inventory across the entire market. I think that by next October we will see inventory get back to pre-pandemic levels, but it will not carry through the winter. It always goes down substantially in the winter, and we will see it again.
Rainis: New development will drive the increase in inventory and pricing and The Parker will be there to fill this void.
Warren: I think we will continue to see inventory get back to levels where it should be. However, I do not believe this will drive prices downward. We simply do not have enough new construction to create an oversupply. The additional inventory will create a more balanced Boston real estate market with reasonable appreciation rates.
Raveis: We’ve recently seen some amazing numbers all around Boston and there is still pent-up demand for high-quality products. Having a strong listing agent and buyer’s agent with knowledge of where you want to sell or live is more important than ever. We also have a return of foreign buyers, so we expect the market to remain strong in the Boston area.
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Welcome to another exciting year for the Boston condo market. If you’re reading this, there’s a good chance you’re interested in buying or selling a Boston condo. So it’s important that you understand what to expect in 2018.
In 2017, we experienced the return of extreme multiple-offer situations, consistently low inventory and more cash condo buyers. New Boston condo construction began blanketing the city and many new developments are in the pipeline.
So what’s on tap for the new year?
Here are my thoughts:
1. We’ll be seeing a more balanced market. In 2017 was a hot market for the Boston Proper area, especially in the Seaport District and South Boston. Many South Boston sellers were flabbergasted at the prices they were being offered for their three-deckers. But with the holidays cooling things down and buyers gaining some perspective, I’m predicting will have fewer over asking price offers in 2018. With many experts seeing higher mortgage rates coming our way, and more supply created by new construction will keep things even.
2. Boston Condo Inventory will hit the market in February. “After the Super Bowl” has traditionally been the time frame that has ushered in the new Boston condo inventory. I predict that February 2018 will be no different. I’m already seeing Boston condos that were off the market for the holidays being promoted again. My Boston real estate agents are holding new listings back until after the 2018 Super Bowl. (Go Pats!)
3. Boston condo values will experience modest increases. Boston condo demand continues, especially in popular, central neighborhoods near public transportation, retail areas, and services. this would include my neighborhood Beacon Hill but also Back Bay, Seaport/Waterfront, and Downtown/Midtown. I see appreciation in the 3-6% range.
4. Competition will still be fierce among buyers. There will be multiple offers on low-end Boston condos (under $500,000). A whole new crop of buyers will be entering the market this year, and there are only so many properties available in the low range. I’ve already met with half a dozen prospective buyers in late 2017 who are ready to get going, and I’m sure my experience as a Realtor isn’t isolated.
5. The luxury market will make a strong showing. Not only will the low-end Boston condo market be active, but so will the Boston luxury condo market. Boston still attracts local and foreign luxury buyers and will continue doing so in 2018.
6. Cash sales will continue in notable volume. Foreign investors and the tech sector will again drive cash sales in 2018.
7. New construction condos in Boston neighborhoods will cost you well above $1,000/sq foot. Several condo developments with prices averaging $1,200/sq foot or more. don’t be surprised to see more $1,500 per sq ft as the new norm for newly developed projects.
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