Is the Boston condo for sale market sustainable? With interest rates and inflation both on the rise, the Boston condo for sale market has recently taken a hit as days-on-market are increasing. In fact, according to a recent Forbes article the cost of buying a home jumped more than 20% this April compared to the same month in 2021.
As a result, many experts have begun to question whether the housing market is sustainable in its current form. Statistics show that housing prices have become increasingly unaffordable for many Americans, and it is unclear whether this trend can be reversed.
Whether you’re a first-time Boston condo buyer or a real estate investor, here’s what you need to know about the sustainability of the current market.
First and foremost, let’s talk about interest rates. Unfortunately, the Fed has announced that there will be another interest rate boost to come. Higher mortgage rates are obviously unsustainable for most Americans as inflation continues to rise. But how high is high?
According to Nadia Evangelou of the National Association of Realtors (NAR), rates should average around 5.7% by late 2022.
These higher mortgage rates along with low supply and high demand are continuing to put pressure on the current summer Boston condo for sale market. In fact, monthly payments for the average home now are up $600 since the start of the year.
In summary, the housing market is getting even more difficult to justify.
What about housing market predictions and Boston condo for sale prices for 2023? Looking ahead, we can currently expect interest rates to continue to rise.
However, experts don’t expect that interest rates will make as big of a jump as they have in the past few months. As mentioned above, most real estate agents and those in the industry believe that mortgage rates will level off at about 6%.
Expect the market to cool off a bit in the following year, too. The reason? Downtown Boston condo buyers are getting priced out and simply can’t afford to purchase the homes they previously wanted. However, overall, experts expect the increase in home prices to level off as well.
In fact, in the same excerpt above from Nadia Evangelou of the National Association of Realtors, homebuyers earning $75,000 can afford 25,000 fewer listings than they could have back in January of 2022.
What this also does is increase the number of homes available on the market. This is particularly true for more expensive homes with a value of over $1,000,000. Expect more luxury homes to sit on the market longer in 2023.
For first-time Boston condo buyers, the process of purchasing a condominium can be both exciting and daunting. There are a number of important factors to consider, from budget and location to transportation and amenities.
It’s important to take your time and do your research to find the right property for you and your family. With the current Boston condo for sale market in the shape that it’s in, this has never been more true.
Here are a few things first-time home buyers should keep in mind:
- Work with an experienced Boston real estate agent who can help you navigate the process and understand your options.
- Get pre-approved for a mortgage before you start shopping for homes. This will give you an idea of what you can afford and help to narrow your search.
- Be prepared to make a decision quickly if you find the right property. The housing market is competitive, and you don’t want to miss out on your dream home.
Follow those tips when you’re getting started. But keep an eye out for changes in the market throughout 2023 and 2024. More on that below, so keep reading.
We’ve gone over the current market conditions and the predictions for the following year. But will the housing market crash? Experts are expecting a correction, not a crash. Here are some of the most commonly asked questions relating to those changes.
What about the boom itself? Is that sustainable? Simple answer no.
CoreLogic, a leading housing data and analytics firm, forecasts that home price growth will slow in the coming year. This is due in part to the fact that there was already a shortage of homes before the COVID-19 crisis struck.
With more people than ever looking to buy a home, the housing market is simply not able to keep up with demand.
What does this mean for Boston condo buyers? It could mean that prices continue to rise, making it even more difficult to afford a home. Or, it could mean that the market starts to cool off and homes become more affordable again, but I wouldn’t hold my breath on that in the short-run. As stated, I see a minor correction, but certainly not a crash.
Zillow polled real estate experts and found that 26% of them think that first-time homebuyers should see an increase in housing inventory for sale by 2024.
However, it’s not expected to get back to levels that Boomers or even Gen X have seen. In fact, the poll revealed that 18% don’t believe the share of first-time buyers will rise above 45% until after 2030.
Ultimately, there’s no right or wrong answer; it all depends on your individual circumstances.
If you’re already in a good financial position and you’re confident that you can afford a Boston condo for sale, then there’s no reason to wait especially with the ever increases in Boston apartment rents.
However, if you’re still working on your finances or you’re not sure about the housing market, it might be wise to wait until after 2023 at least. Whichever route you choose, make sure to do your research and speak to a financial advisor before making any decisions.
Still thinking of buying a Boston condo for sale in the 2022 after the predictions made above? Here’s what to know given the unsustainability of the current market.
Namely, you should be realistic about your budget. It is important to know how much you can realistically save for a down payment. Consider the cost of monthly mortgage payments.
Think about the rising costs of gas and other goods and factor that into your monthly budget. As most have seen, this might affect the type of mortgage you’re willing to take out as you’ll have less leftover each month for mortgage payments.
Likewise, it’s essential to get pre-approved for a mortgage before beginning the home-buying process. This will give you a better idea of what you can afford, and will also make you more attractive to sellers.
Finally, first-time home buyers should be prepared to compromise on their wish list. It’s unlikely that you’ll be able to snag all of the items on your “dream home” wish list. However, if you’re willing to compromise, you’ll likely be able to find great deals as the market cools off a bit.
Whether you’re interested in purchasing Boston condo for sale as an investment or for your first home, our biggest suggestion right now is to keep an eye on the market and changing conditions.
All in all, experts predict that interest rates and home prices will start to level off soon. This means that you can rest (somewhat) assured that you won’t see a drastic increase in prices and rates like we have this past year.
Wait for things to cool off a bit if you’d like to be sure and continue to work on your credit score and down payment in the meantime. And, continue to follow market conditions.
To help you stay on top of changes in the housing market, we’ve curated a list of housing articles for you. Browse through our Boston real estate blog to stay on top of the latest news and changes.