My Boston condo buyer has a problem.
Rising mortgage rates have pushed him out of the Boston condo market as sellers have refused to slash their prices. many opted to rent their condo or take it off the market.
We’re currently in a stalemate with Boston condo buyers and sellers this fall season.
This Boston condo buyer has seen condos within his reach become unaffordable as mortgage rates have doubled in the past year. The average rate on a 30-year fixed mortgage Thursday was 6.7 percent, the highest since July 2007. A year ago, rates were at 3 percent.
Historically, when borrowing costs go up, Boston condo prices come down, but that has not happened this time because so few homes are for sale.
Boston condo for sale inventory hasn’t increased much to really turn it into a true buyer’s market. Some sellers are softening asking prices to compensate for these significantly higher mortgage rates.
Many first-time homebuyers have been scrambling in the past few months as rates rose — backing away from deals, getting help from their parents, or rushing into deals in the hopes of avoiding even higher rates
As rates rise there will be fewer bidding wars and Boston condo buyers to compete with. At some point, Boston condo sellers will need to lower their asking price.
Plunging home sales have led to layoffs across the industry. Brokerage giant Compass has undergone several rounds of them. Anywhere Real Estate also slashed staff. Proptech startup Divvy Homes let 12 percent of its workforce go.
In the mortgage world, Citi cut its lending staff in September, Blend Labs eliminated 220 jobs in August on top of 200 jobs cut in April (shedding approximately 25 percent of its workforce.
To answer the question are Boston condo buyers going to see 7%, no one can say for certainty, but my guess is we will see it before the end of the year.