Boston Condos for Sale and Boston Apartments for Rent

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Boston condos are almost 5x annual incomes

There’s a rule of thumb in real estate that homebuyers should spend roughly 2½ times their annual income on a home purchase. And like a lot of old real estate rules, that one’s gone out the window for Massachusetts home buyers — especially in places like downtown Boston where Boston condominium values have skyrocketed.

A new survey data from the federal government shows that in the Boston metro area, home values are 4.6 times higher than their income.

Boston ranked eight highest among the 25 metro areas in the survey for the ratio of home value to income. Four of the five metros with the highest median ratios were in California.

This is sometimes called being “house rich, cash poor.” We’ve seen this situation arise for some older, retired homeowners in the Boston area who are living on a modest income while their home has appreciated tremendously in value. The term can also describe younger homeowners who are spending a very high percentage of their income on housing.

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Boston condos

The data comes from the new 2021 American Housing Survey, or AHS, which is the most comprehensive survey of housing data in the U.S. It is sponsored by the Department of Housing and Urban Development and conducted every other year by the U.S. Census Bureau

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Boston condos

The AHS data shows how sharply home values have risen in relation to income over the past decade in the Boston area, even as incomes also increased greatly.

While Silicon Valley has some of the highest incomes in the nation, the home prices are even more astronomical. The San Jose, California, metro area ranked No. 1, with a median ratio of 7.1. San Francisco (7.0) and Los Angeles (6.9) rounded out the Top 3.

Rochester, New York, was at the other end of the spectrum from San Jose — the median ratio of home values to income was 2.2.

My Boston Condo Thoughts

If this data is correct, I can’t see how these Boston condo for sale prices can be sustainable. Its my understanding that San Francisco is already seeing price drops for their housing listings.

Source: American Housing Survey