Boston real estate thoughts/predictions. Is it too early to make 2023 predictions?
I’d like to begin this post by telling a little story about myself (I’ll keep it short I promise). When I was kid, I was obsessed with astronomy. I had all the books and watched all the Discovery Channel documentaries on black holes and dark matter. But my favorite thing was going into my backyard at night and using my telescope. I’m not telling you this to to say I was some kid prodigy, trust me I wasn’t – if I got a C on my report card my parents were happy. I hardly understood anything about astronomy. Either way, I was hooked.
As I got older, I upgraded to a more advanced telescope and started getting into to the abstract concepts of astronomy. One concept I specifically remember learning about was light. Light itself is so unique and has such odd properties. But the thing about light that really struck me was this – technically, when we look at something like a distant star, we are looking into the past. That concept to this day blows my mind. However, before I get carried away, I want to take a step back and discuss the Boston condo for sale market both the past, present and future.
I remember 2018 and 2019 being fairly flat and a bit of a struggle. Boston condo rates had been in the 3% to 4% range during the 2015-2017 period, and once they got back into the mid-to-high 4s in the summer of 2018, pricing hit the skids. Luckily, rates dropped under 4% in late-2019 which caused us to be optimistic about the selling season of 2020 – and you can see that pricing got off to a good start.
The Pandemic Stall caused a blip in April, 2020, but we recovered and charged into 2021. You could say that local pricing took off like a rocket.
Today sales have slowed because of the higher interest mortgage rates for Boston condos, and it could get worse going into 2023.
While 2020 is winding down and we look forward to next year, I’ve listed some unique factors that I think will impact the 2021 Boston real estate market. I’ve been accused before that as a Boston real estate broker my predictions and thoughts are too optimistic. That’s why I removed the comment section of my Boston real estate blog post. (Only joking, mostly because I couldn’t control spam comments) But please email and let me know your thoughts.
Low Mortgage Rates –
Rates around 3% are expected to continue through 2021, and they are probably the #1 factor that keeps Boston condo buyers interested – because you can buy a larger condo in the downtown Boston real estate market. This is especially helpful for those who are trying to move up.
Vaccine News –
Just the thought of Covid-19 coming to an end will energize the populace, and motivate individuals to come back to the downtown Boston real estate market.
Working From Home –
If this trend continues, which I think it will, it might spur Boston condo owners to sell their condominium in search or a larger one with more rooms. Thus, this will spur on the Boston luxury condo market by creating more demand.
Unemployment Numbers –
As stated in my earlier Boston real estate boog post, the unemployment numbers are coming down and I see this trend continuing into 2021. This will have a positive impact on the Boston condo for sale market.
Eviction Ban Being lifted
With both tenants and landlords being affected, this will cause some turbulence in the apartment rental market, Some landlords will throw in the towel and get out of being a Boston apartment landlord. This could help in increasing the Boston condo for sale inventory.
No matter who wins the presidential election, it will be the last straw for some. I’m not sure how this will impact the Boston real estate market, but either way, 1/2 of the country won’t be happy with the results regardless of who wins. I’ve learned the hard way, the less I say about politics the better.
Real Estate and the Divorce Rate
With the divorce rising, technically, this could add more buyers and sellers, but realistically those coming out of a divorce will be more likely to split their equity and take a break. Might create more demand in the apartment rental market.
From the WSJ: Biden will raise the tax on the capital gains of high earners to the same rate as wage income, increasing the rate to 43.4% (39.6% plus Medicare 3.8% investment tax) from 23.8%. Mr. Biden on Thursday estimated that these increases on high earners would raise $92 billion, but that’s before they put their tax lawyers to work. Biden has also said he will eliminate the 1031 exchanges, but all of the above will need Congressional approval. Just the thought could cause landlords to hurry up their plans of selling.