Boston Condos for Sale and Boston Apartments for Rent
Boston condos for sale. My thoughts on the upcoming spring Market
In order to make any sort of predications about what the 2023 spring market, it’s important to look at where we are today. The first few weeks of 2023 has been an intense time for the Boston condo for sale market, as we’re beginning to see the effects of the boosted interest rates and uncertainty that have characterized the economy for the past several months. Mortgage originations plummeted, financing homes became extremely costly, and Boston apartment rent growth has slowed.
Boston Condo Market and The Fed
Action from the Federal Reserve will be a key factor in determining what Boston condo Spring market will look like for the whole economy and especially for our Boston real estate market . If supply chain issues persist, inflationary pressure will remain high and the Fed will keep upwardly adjusting rates, albeit more slowly, through the first half of 2023, if not longer. However, slower consumer spending, a decline in shelter inflation, and a lack of supply-side surprises could bring about the soft landing we’ve been hoping for – and the end of mortgage rate increases for Boston homebuyers.
A Closer Look at Housing
Housing has been a hot button issue in the media this year – Massachusetts population decline, work-from-home measures, and affordability policies have all been leading in the local news. And when one of these factors shifts, it has a ripple effect on the others.
The single-family market dried up considerably, responding to skyrocketing interest and mortgage rates that stemmed from monetary policy. Transaction volumes for Boston condo sales dipped in December versus same time last year. Boston condo owners are reluctant to leave their low-rate mortgages to become sellers, and perspective condominium buyers are having affordability issues with these new mortgage rates. Median Boston condo sale prices fell in December with demand.
As significant as the shift in the Boston condo for sale market seems, it’s more of a normalization than a crash. Market dynamics are coming back into alignment with labor markets and incomes. But not as much as needed.
The Boston rental market has lagged behind its Boston condo counterpart, and we’ve yet to see widespread rent declines throughout the downtown Boston area.
Moody’s Analytics Baseline for 2023
Top economists’ forecast calls for cautious optimism. “The continuation of current trends in low energy prices, supply chain stability, modest wage growth, and softening consumer spending will bring inflation on a path back towards the Fed’s comfort zone of 2-3%. There is even an outside chance rates could reverse their course later in the year.“
What does this all mean? If this forecast holds true, overall shortages and trouble within Boston condominium market will stabilize for now.
In order for Boston apartment rents to fall, it would require a larger hit to wage and employment than we’re currently seeing. The Boston condo market will likely tick up again in Summer 2023. This, in turn, will ease apartment rental demand, bringing 2023 rent growth to about 3-4%.
Boston condos and apartment rental market
An outright freefall for the Boston condo and apartment sectors is unlikely as both continue their long-term evolutions.
Boston Real Estate Blog Updated 2023
