Boston Condos for Sale and Rent

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How does Boston real estate supply impact buyer’s demand

There’s a well-known economic theory – the law of supply and demand – that explains what’s happening with Boston condo prices in the current real estate market. Put simply, when demand for an item is high, prices rise. When the supply of the item increases, prices fall. Of course, when demand is very high and supply is very low, prices can rise significantly.

Understanding the impact both supply and demand have can provide the answers to a few popular questions about today’s Boston downtown housing market:

  • Why are prices rising?
  • Where are prices headed?
  • What does this mean for homebuyers?

Why Are Boston Condo Prices Rising?

According to the latest Home Price Insights report from CoreLogic, home prices have risen 18.1% since this time last year. But what’s driving the increase?

Real Estate market

Real Estate market

Recent buyer and seller activity data from the National Association of Realtors (NAR) helps answer that question. When we take NAR’s buyer activity data and compare it to the seller traffic during the same timeframe, we can see buyer demand continues to outpace seller activity by a wide margin. In other words, the demand for homes is significantly greater than the current supply that’s available to buy (see maps below): This combination of low Boston condo supply and high demand is what’s driving home prices up. Bill McBride, the author of the Calculated Risk blog, puts it best, saying:

“By some measures, house prices seem high, but the recent price increases make sense from a supply and demand perspective.

Where Are Boston Condo Prices Headed?

The supply of Boston downtown homes for sale will greatly affect where prices head over the coming months. Many experts forecast prices will continue to increase, but they’ll likely appreciate at a slower rate.

Buyers hoping to purchase the home of their dreams may see this as welcome news. In this case, perspective is important: a slight moderation of home prices does not mean prices will depreciate or fall. Price increases may occur at a slower pace, but experts still expect them to rise.

Five major entities that closely follow the real estate market forecast home prices will continue appreciating through 2022 (see graph below):What Do Supply and Demand Tell Us About Today’s Housing Market? | Simplifying The Market

What Does This Mean for Homebuyers?

If you’re waiting to enter the market because you’re expecting prices to drop, you may end up paying more in the long run. Even if price increases occur at a slower rate next year, prices are still projected to rise. That means the home of your dreams will likely cost even more in 2022.

Boston Condos for Sale and the Bottom Line

The truth is, high demand and low supply for Boston condos for sale are what’s driving up home prices in today’s housing market. And while prices may increase at a slower pace in the coming months, experts still expect them to rise. If you’re a potential homebuyer, let’s connect today to discuss what that could mean for you if you wait even longer to buy.

Boston Condos for Sale and Rent

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Boston Condos for Sale and Rent

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The latest edition of the Realtors Confidence Index from NAR sheds some light on the relationship between seller traffic (supply) and buyer traffic (demand). Until the supply of homes for sale starts to meet buyer demand, prices will continue to rise.

The price of any item is determined by supply, as well as the market’s demand for the item. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between  Boston condo seller traffic (supply) and Boston condo buyer traffic (demand). 

Real Estate Buyer Demand

Real Estate

Real Estate

The map below was created after asking the question: “How would you rate buyer traffic in your area?” As you can  see from this map the demand for Boston real estate is still in high demand. The darker the blue, the stronger the demand for homes is in that area. The survey shows that in 3 of the 50 U.S. states, buyer demand is now very strong; only 2 of the 50 states have a ‘weak’ demand. Overall, buyer demand is slightly lower than this time last year but remains strong.

Seller Supply 

real estate

Real estate

The index also asked: “How would you rate seller traffic in your area?”As the map below shows, 18 states reported ‘weak’ seller traffic, 29 states and Washington, D.C. reported ‘stable’ seller traffic, and 3 states reported ‘strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyers who are looking for homes.

Boston Condos for Sale and the Bottom Line

Looking at the maps above, it is not hard to see why prices are still appreciating in the Boston real estate market. Until the supply of Boston condos for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in our market now.

Boston Condos for Sale and Rent

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