Boston condos for sale: Think prices are going to fall?
Boston Condos for Sale and Apartments for Rent
Boston condos for sale: Think prices are going to fall?
The other day, we had the view that Boston condo prices will “go through the roof” if mortgage interest rates drop by 1%.
Today, we will provide you with the other side of the argument.
Updated: Boston Real Estate Blog 2024
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Boston condos for sale: Think prices are going to fall?
I’m back to Boston Real Estate Blogging again, as I admit that I slacked of the last few summer months
Hopefully you had a great summer and were able to vacation somewhere on the planet that wasn’t 120 degrees in the shade.
I’m excited about the fall, but also nervous about the Boston condo for sale market.
I’ve watched numerous hours of cable news, it appears there is less talk about a recession, but Fall is also a time of stock market curveballs (that’s when the Great Recession and Black Monday were thrown at us).
Just a word on the downtown office space
Will office employees return back to work. My predictions probably not, yes, some companies like Goldman Sac are now requiring workers back. However, I think we’re in a changing time, similar to the industrial resolution, that being said, we have numerous amount of sq. ft. office space available, and a new term, “urban doom loop,” is being bandied about.
Will “Red October” slam the Boston Housing market?
Second to office in terms of distress properties is the Boston apartment and multi-family sector. When interest rates were low, investors bought rental buildings. But those investors weren’t counting on rising interest rates when they took out floating-rate loans. Cue what some are calling “Red October,” with nearly $8 billion in multifamily loans coming due in October and November. This is expected to drive a wave of distress properties. If you’re an investor looking to buy a Beacon Hill building, hang in there deals will be coming.
The outlier is the jet-setting global wealthy, the 1 percent of the 1 percent, who are immune to market forces and can pay cash whether they’re buying a Four Seasons-branded condo in Boston’s Back Bay or a luxury condo for sale in Beacon Hill
Of course, underlying all of this — determining the fate of the office, multifamily and residential markets — is the availability of money.
Reporter Isabella Farr also takes a look at Arbor Realty Trust, the best-known publicly traded lender skewed toward multifamily. As rates have risen over the past year, Arbor has become exposed to borrowers that are struggling to pay off these loans.
Still, whether Boston condo and apartment developers will support enough development to address housing shortages remains to be seen.
So will Boston condo prices fall? If they do at all, I don’t think it will be much.
Updated: Boston Real Estate Blog 2023
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Over the last two years, the rate of Boston condo for sale prices appreciated at a dramatic pace. While that led to incredible equity gains for homeowners, it’s also caused some buyers to wonder if home prices will fall. It’s important to know the housing market isn’t a bubble about to burst, and home price growth is supported by strong market fundamentals.
To understand why price declines are unlikely, it’s important to explore what caused home prices to rise so much recently, and where experts say home prices are headed. Here’s what you need to know.
Boston Condo Prices Rose Significantly in Recent Years
The graph below uses the latest data from CoreLogic to illustrate the rise in home prices over the past year and a half. The gray bars represent the dramatic increase in the rate of home price appreciation in 2021. The blue bars show home prices are still rising in 2022, but not as quickly:
You might be asking: why did home prices climb so much last year? It’s because there were more buyers than there were homes for sale. That imbalance put upward pressure on home prices because demand was extremely high, and supply was record low.
Where Boston Condo Agents Say Prices Will Go from Here
While housing inventory is increasing and buyer demand is softening today, there’s still a shortage of homes available for sale. That’s why the market is seeing ongoing price appreciation. Mark Fleming, Chief Economist at First American, explains it like this:
“. . .we’re still well below normal levels of inventory and that’s why even with the pullback in demand, we still see house prices appreciating. While there is more inventory, it’s still not enough.”
As a result, experts are projecting a more moderate rate of home price appreciation this year, which means home prices will continue rising, but at a slower pace. That doesn’t mean prices are going to fall. As Selma Hepp, Deputy Chief Economist at CoreLogic, says:
“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”
In other words, even with higher mortgage rates, moderating buyer demand, and more homes for sale, experts say home price appreciation will slow, but prices won’t decline.
If you’re planning to buy a home, that means you shouldn’t wait for home prices to drop to make your purchase. Instead, buying today means you can get ahead of future price increases, and benefit from the rise in prices in the form of home equity.
Boston Condos for Sale and the Bottom Line
Home prices skyrocketed in recent years because there was more demand than supply. As the market shifts, experts aren’t forecasting a drop in prices, just a slowdown in the rate of price growth. To understand what’s happening with home prices in our area, let’s connect today.
