What will the Boston condo for sale market look like in 2021? Will Boston condo sales prices go up or down? Is another housing market crash coming? These are the questions that almost every Boston condo buyer, seller, and Boston real estate broker and agents are asking right now.
Although some expected home prices to drop in 2020 due to COVID-19, this year has defied the most pessimistic expectations about the real estate market with high rise condos being the exception. Let’s look at the current house price trends and from them, we can make our real estate market forecast for 2021.
Current Boston Real Estate Market Trends in 2020
The current situation in the Boston real estate market can be summed up as better than predicted. Even amid economic uncertainty, those who can afford to buy property are doing so now.
Boston Real Estate Demand is high and rising
Lockdowns and the uncertainty around the presidential elections put brakes on many people’s plans for moving to a new home earlier this year. As those events pass, many impatient Boston condo buyers are making a move, and demand has been rising steadily. Redfin reports that the number of homes sold has risen by 22.6% since last year. The steeply falling median days on market (down 16 days YoY) shows a huge spike in demand and competition among buyers.
Boston Real Estate Mortgage Rates
Historically low mortgage rates and a shift in homeowners’ needs drive this unexpectedly high demand. More condo buyers want some outdoor space like a balcony; extra space for a home office or online schooling of kids.
People felt trapped in homes not big enough and now want to quickly move to avoid it happening again. Realtors are now expecting to start 2021 strong, turning winter into an unusually active home sales season.
To understand current Boston condo price trends, we need to look at supply vs demand.
COVID-19 and the election caused many potential sellers to keep their Boston condos for sale off the market, further driving down the number of homes for sale. Despite the rise in virtual open houses, some people still feel uneasy about meeting for negotiations or going house hunting for a new home, especially high rise condo buildings.
Home prices are up year over year
As a result of the previously mentioned trends, Boston condo prices are actually up right now, YoY. Neither COVID-19 nor the economic uncertainty it brought about has been able to pull home prices down in most areas of downtown Boston.
So what does this mean for house prices in 2021? Let’s take a look.
Overall, housing market predictions are optimistic for 2021 when it comes to price appreciation. Zillow reports a 7.9% YoY increase from now through October of next year.
Although not many experts believe that home prices will go down in 2021, some do see a slow down in price growth. This slowing down of growth is expected because of a few reasons:
- As available inventory is tight and quickly gets sold out, the remaining buyers who cannot afford above-list prices will be priced out of the market. This will mean that house prices will stop growing so fast because the market will calm down.
- After the elections, supply might increase a bit, giving buyers a few more options to choose from.
- If there are no more federal assistance plans and regulated forbearance options as provided by the CARES Act, a lot of homeowners might default on their mortgages. This could flood the market with foreclosures.
- Rising unemployment due to the coronavirus crisis can also slow down the housing market but its effect will come later in 2021.
Is a housing market crash expected?
No, a housing market crash is not likely to happen. Experts expect just flattening of the growth curve but still expect prices to remain high. Most of the problems in housing finance that led to the big crash in 2008 are non-existent right now. It is also likely that low mortgage rates will be available at least a bit longer, taking some financial burden off of borrowers.
Boston Real Estate and the Bottom Line
So the experts’ answer to the question “Will house prices go down in 2021?” is no. They may stop growing at the pace they have been in past years.
Boston condo buyers might decide to wait a bit longer to see if a fresh supply of properties will hit the market. But a significant drop in Boston condo prices – is not likely. And its more likely interest rates will go up in 2021 so even if there was a minor drop in the downtown Boston real estate sales market, it would be offset by higher interest rates