Prior to the pandemic’s red-hot Boston condo for sale market, there was a simple profile that constituted an “A” buyer: An A buyer was someone who was pre-qualified for a loan, had 3% down and could go out this weekend and buy a Boston condo for sale. Now, an ‘A’ buyer has all cash.”
In addition, the top Boston Back Bay condo buyers today are willing to waive appraisals and inspections and, in some cases, don’t even view the Boston Seaport condo for sale they’re purchasing in person.
Everyone is being squeezed, and middle-class affordable Boston condo are suffering
Americans are aware of the struggles they face in buying a home. More than 70% of U.S. adults believe the housing market is currently in a bubble, and more than half say it’s a bad time to buy a home, according to a survey of more than 7,000 adults from Momentive.
Boston condo prices is a major factor that’s keeping potential home buyers on the sidelines – some 38% said they have delayed or canceled plans to buy a home due to inflation. People of color were also more likely to push off a home purchase due to rising costs, the survey found.
In February, the median sales price for homes in the U.S. was $357,300, a 15% increase from a year earlier, according to data from the National Association of Realtors.
At the same time, mortgage rates are also increasing, which means buyers that need loans will pay more for them as well, said Danielle Hale, chief economist at Realtor.com.
That can hurt younger consumers, as well as first-time buyers, according to Hale. It also means that homeownership as a path to building wealth is now out of reach for many.
It’s a very competitive market for those who are shopping for Boston condos for sale
Some homeowners may be tempted to stretch their budgets to purchase a house, especially if they’ve had months of searching and being outbid.
The amount of time you expect to spend in the home also matters. If you’re looking to live in a house for more than five years, it may make sense to pay slightly more now.
On the flip side, there are some situations where it does not make sense to increase your homebuying budget.
Stick with your original plan if paying more would make it difficult to contribute to other financial goals, such as saving for retirement or paying down debt.
It also doesn’t make sense to stretch your budget to a point where you can only afford it with tax breaks, said Cheng. If those benefits go away in the future, you’ll be in trouble.
The U.S. housing market tapped on the brakes in recent months after reaching scorching highs.
The S&P CoreLogic Case-Shiller Index reported a 19.1 annual gain in home prices in October, down from 19.7 percent the previous month. It was the second consecutive month of declining price gains.
Phoenix, Tampa, and Miami had the highest year-over-year gains in October among the 20 cities analyzed. Phoenix reported a 32.3 percent year-over-year price increase, while Tampa had a 28.1 percent increase and Miami notched a 25.7 percent increase.
Every region recorded double-digit gains, but the South and Southeast regions posted the highest, according to the Index.
The housing market continues to remain on a torrent pace since the onset of the pandemic. Driven by record low mortgage rates and a demand for more space during stay at home orders, people have flocked to buy single-family homes.
Single-family rental firms and iBuyers have also added to the frenzy, leading some analysts to question whether the housing market’s growth is sustainable. Housing analyst Ivy Zelman, who predicted the last housing crash, warned in November that prices are becoming out of line with actual demand.
The S&P Index, however, shows prices are still rising across all metro areas even despite struggles by homebuilders to construct new homes.
Lennar reported that backlogs grew to 26 percent year-over-year, to 23,771 homes at the end of the fourth quarter. In a a teleconference with analysts this month, company executives called it a game of “Whac-A-Mole” as to when materials arrive.
Current housing market conditions
Should you wait until spring to put your home on the market? A recent Realtor.com report says, not necessarily.
While home sales historically slowed down in winter months and around the holidays, today’s real estate market isn’t quite like that. Let’s face it, nothing about today’s market is like markets of the past. This winter will be nothing like the recent past.
In a year where local agents pulled out all the stops to help their clients win bidding wars, housing competition has started to ease, yet homes are still selling faster than usual for this time of year.
Realtor.com chief economist Danielle Hale said that although the market tends to freeze up once the snow falls, she predicts the post-pandemic winter of 2021-2022 will be different. “Sellers can expect to see plenty of buyers,” she said.
That’s in part because even though housing competition started to ease in the fall, home prices continue to hit record highs and inventory continues to be an issue.
Lawrence Yun, chief economist at the National Association of Realtors said compared to past winters, this season’s sales activity will be stronger. “This winter, there will be more sales compared to pre-pandemic winters going back all the way to 2006,” he told Realtor.com.
Current housing market conditions
Monthly home value growth has slowed from its record-breaking pace this summer, inventory is up for the fourth month in a row and more sellers are cutting their list price. This all points to less competition for home shoppers, but make no mistake, the housing market remains clearly tilted in favor of sellers,” says Zillow senior economist Jeff Tucker. Indeed, the latest Zillow market report released in October notes a slight softening in for-sale markets, with monthly home value appreciation slowing for the first time since January. The Zillow report also reveals that inventory of for-sale listings rose for the fourth month in a row, along with more sale listings cutting prices, which is beneficial for home shoppers. Looking ahead, Zillow economists expect the typical home in the US to increase in value 4.7% over the next few months, resulting in an increase of 11.7% by August 2022.
The frenetic pace in housing may be cooling somewhat, but demand still far exceeds a limited supply of homes available for sale,” adds Greg McBride, chief financial analyst at Bankrate concurs. “Waiting in expectation that prices will fall seems unlikely to pay off,” says McBride. But he says, proceed with caution: “Waiting until you’re not pressured to make an offer on the spot or sight unseen, forego inspections or waive contingencies is a prudent choice,” says McBride.
Current housing market conditions
If you’re in the market for a Boston home, here’s some good news. Mortgage rates remain near historic lows: Some 15-year rates are near 2% and some 30-year rates are below 3%, as you can see here. What’s more, buyers looking for a home in fall and winter may have a bit of an easier time than they did this summer, experts say.
What’s more, inventory is up: More than 1.1 million homes were for sale in August, up 4.1% from July. And home sales have slowed, according to data from the National Association of Realtors, which reveals that single-family home sales have decreased 3.1% from a year ago. Another factor in buyer’s favor is that fall and soon winter are upon us, and those are two seasons when homes tend to sell for less of a premium than they do in spring and summer months.
All that said, none of this means big changes for Boston condo buyers.
“Make no mistake, it’s still a very competitive market,” says Bachaud. Adds Greg McBride, chief financial analyst at Bankrate: “There’s been a bit more inventory of homes available for sale to come on the market and things aren’t as frenetic as earlier in the year, but this is still a very hot housing market where demand far exceeds supply in most markets.” That said, you can expect fewer bidding wars, fewer instances of buyers buying sight unseen or waiving inspections.
For Boston condo sellers, it won’t have a huge impact either. Boston condo sellers won’t see a deluge of offers above asking price, and it might take a little longer to sell.
“Mortgage rates have also stayed stubbornly low, making now a good time to buy and lock in a relatively low payment if a buyer finds a home that fulfills their wish list and that they can afford,” says Bachaud.
That said, it’s important to consider what you can actually afford, and ensure that you’re not buying the wrong house because you get caught up in the real estate frenzy: “Making the biggest financial decision of your life under duress is not a recipe for success,” says McBride.
The chart below shows housing market conditions throughout the United States
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