Boston Condos for Sale and Apartments for Rent

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Is a Boston condo sales slowdown around the corner?

Let’s look at the facts:

KEY INDICATORS

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40% from 5.33%.
  • Applications for a mortgage to purchase a home fell 7% for the week and were 21% lower than the same week one year ago.
  • Refinance demand dropped 6% for the week and was down 75% year over year.

Boston condo mortgage rate increase

Mortgage rates are back on the upswing, after a brief decline in May, and the housing market is still suffering from a lack of listings. As a result, mortgage demand continues to drop.

Total mortgage application volume fell 6.5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand hit the lowest level in 22 years.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40% from 5.33%, with points rising to 0.60 from 0.51 (including the origination fee) for loans with a 20% down payment.

Refinance demand, which is most sensitive to weekly rate moves, fell another 6% for the week and was 75% lower than the same week one year ago. The vast majority of mortgage holders now have rates considerably lower than the current one, and even those who would like to pull cash out of their homes are choosing second mortgages, rather than refinancing their first liens.

“While rates were still lower than they were four weeks ago, they remained high enough to still suppress refinance activity. Only government refinances saw a slight increase last week,” said Joel Kan, an MBA economist.

Applications for a mortgage to purchase a home fell 7% for the week and were 21% lower than the same week one year ago.

“The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past two months. These worsening affordability challenges have been particularly hard on prospective first-time buyers,” Kan said.

Mortgage rates moved even higher to start this week, according to a separate survey by Mortgage News Daily. Rates have been in a narrow range for several weeks after moving decidedly higher in the previous months.

“There’s some chance that the upper boundaries of that range end up being a ceiling for rates, but that will depend on inflation and other incoming economic data,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “With a key inflation report set to release on Friday morning, the potential for volatility remains high.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40% from 5.33%.
Applications for a mortgage to purchase a home fell 7% for the week and were 21% lower than the same week one year ago.
Refinance demand dropped 6% for the week and was down 75% year over year.

Boston condos for sale

To sum it up, I do see a Boston condo for sale slowdown. The question is how bad will it be.

Source: CNBC Real Estate

Updated: Boston Real Estate Blog 2022

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Boston condos for sale
Boston condos for sale

Ford Realty Office

I just had a conversion with a Coldwell Banker broker and he claims that our exuberant Boston condo market is most likely heading for a slowdown in 2018.

I have to admit, the signs are out there: Interest rates are ticking up, with many forecasts predicting that we’ll be looking at four- to five-percent rates as the norm in the near future. And the stock market’s reaction to those rising rates has been fluctuating from one extreme to another.  The Boston Realtors that I spoke with expect only a five percent price increase this year—nothing like our recent history.

With those signs comes a domino effect where buyer and seller behavior are concerned. The higher interest rates naturally lead to a situation where buyers are less willing to pay current prices. (It certainly feels like buyers are starting to reach their financial limits.)

Sellers start worrying about missing the top of the market. With that incentive, they decide to sell sooner rather than later, boosting inventory and easing housing demand. With fewer Boston condo buyers for each property, pricing begins to level off. Overbidding becomes far less dramatic, and listing agents begin advising sellers to price their homes closer to the targeted sale price than their wish price.

I’ve been selling residential real estate in Boston since 1998, and I have to admit that I’m seeing signs of a slowdown on a day-to-day basis. Some properties are sitting on the market longer than I would have expected, for example. But I personally believe that a more level market is healthier for buyers and sellers.

I’m not anticipating prices necessarily falling. But I do believe we’ll be seeing far less extreme overbidding, frenetic contingency-waiving contracts and maybe some Boston luxury condos—particularly in the $2M+ range—spending more time on the market.

My advice at the moment is to do business if you can. Need to move? Plan on putting your condominium on the market this Spring. (Now is the time to get the prep work going.) Want to buy a home? Assess what’s realistically in your price range, and decide whether that will work for you.

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Updated:  1st Q 2018