Boston condos for sale in 2022 have become increasingly unaffordable to many Bostonians— with home prices and mortgage rates continuing to rise.
Though they’re significantly higher than three months ago, which reduces Boston condo-buying power, they’re in the high 5’s for a 30-year fixed-rate mortgage, which historically is a far cry from high.
Boston condominium price appreciation has been rapid in the last two years. Indeed, according to data from the National Association of Realtors, the median sales price for an existing home was up 17% from last year. That’s important because it’s been practically impossible for house-buying power to keep up, and consequently, affordability has been declining.
But just because affordability is a challenge, doesn’t mean home prices are going to fall. Historic research shows that during rising mortgage rate eras like we’re experiencing now, the number of home sales does tend to decline but house prices generally don’t. Fewer sales and less price appreciation is the expectation.
Watch for Boston condo inventory levels and the amount of seller price reductions to increase this year. These are the leading indicators of where prices will go and how the increase in mortgage rates has affected demand. More inventory and more seller price reductions signal a cooling market. For sellers, this means a reset on the expectation of how quickly you’ll home will sell. Mere days on the market were never normal. In fact, the old adage used to be that sellers should typically expect their home may take up to 3 months on the market to sell. Of course, we’re a long way from that yet, but sellers should expect it to take longer to sell their homes. For buyers, expect less fierce competition to buy a home.
Given the current Boston condo for sale market, it’s easy to lose focus amid shifts in mortgage rates and other housing dynamics. The reality is some basic steps remain important and are not much different than any market. Shop around for the best mortgage and in a rising-rate market, investigate adjustable-rate mortgages for the lower rate benefit. Make your choices based on home as shelter, rather than an investment return opportunity, and have patience.