Boston Condos for Sale and Apartments for Rent
When it comes to the Boston condo market perspective is everything
If I knew where things were headed, I most likely wouldn’t be sitting on my computer blogging about what the market is or isn’t going to do, or maybe I would be, relishing the moment. That being said—everyone loves to speculate, but there is significant data and factors that have framed my outlook. It might be obvious to some or contradictory to others, but my only goal in creating this Boston Real Estate Blog post is to create a dialogue or provide Boston condo buyers and sellers some points to ponder on.
Unsurprisingly, my SOI, a new acronym I just learned, (sphere of influence) tends to be my peers: Boston condo brokers in their late forties and fifties. I’m either asked or told daily how the market is doing, where it is going, and if it is going down or up. Now most of my friends, acquaintances, peers, etc., already have a home.
It is important to note that from 1974 to 1992 the rate (nationally) was never better than 8.39% and as high as 16.63% (1981). To put that in perspective, $300k in 1981 was equivalent to $970k today. Also worth noting, a $300k home in 1981 is probably worth well above $970k, probably 2.5x+ if it’s in downtown Boston.
In this blog post, let’s talk about today’s largest group in the Boston real estate market.
The two types of Millennials: Boston condo owners and Boston condo buyers
Now these two groups of Millennials the “already own” and “first time buyers,” they sit on very different edges of the current Boston condo market fence.
The first most likely bought pre-pandemic and are benefiting from massive low interest rates and high appreciation in their home value, while the other is left with their jaw agape at what “coulda/shoulda” happened if any number of factors had been at play.
It’s a double-edged sword for the first group, as they have now potentially doubled their investment but are playing in the same pool as the second group, albeit with twice the equity. What that means is that if they want to leverage their equity and level up into a bigger/nicer Boston condo in the same neighborhood, then they are buying in at the same premium the second group is, higher property taxes (1% of purchase price) and all.
Where does the Boston condo market stand?
So, where does that leave the Boston condo for sale market? There are dozens of contributing factors to where the Boston condo market sits today: massive inflation, looming recession, Russia/Ukraine war, rising interest rates, volatile stock market, supply chain headaches, hiring freezes, another election—the list goes on. Some factors are directly influenced by each other, whereas a few have been unpredictable curve balls. The Russian war wasn’t necessarily predicted, but some effects on the Boston condo market were: The stock market wasn’t going to maintain its pace, interest rates were never going to stay low forever, and supply chain issues are directly related to mandatory quarantines.
The biggest impact on the Boston condo market
Most relevant to the Boston condo market are interest rates and hiring freezes. Understandably, everyone loves to gripe about the current rise in interest rates. They are “high” right now, but from my experience and interactions people tend to be very near-sighted compared to the last 50 years.
What will happen to Boston downtown condo prices?
Let’s cut to the chase, what I personally don’t foresee happening is a significant decrease in Boston condo home-values for a few reasons.
- Inventory will always be an issue in downtown Boston especially in Back Bay and Beacon Hill.
- Lenders are not writing bad loans; they’re being more conservative on who they finance more so than in the past
- Yes, Boston condos that were sold during the pandemic for over-asking might not be appraised at what they sold for today, but there is usually a disconnect between asking and selling price in those scenarios. I wager there is a very small percentage of homes that are appraised for less than what they listed at (as compared to what they sold for). This is a complete 180 from what the market is currently doing now: Boston condos are selling for asking-price and if they are sitting longer than 90 days you can see some price reductions—leading to a quick-sale. This trend will probably continue in increased numbers, as seller begin to see the reality of the new market.
- The economic engine that drives these values is still strong in the Boston area.
- The stock market is bearing down and batting its hatches, but this isn’t necessarily as impactful on the first-time Boston condo-market as it is for the higher Boston high rise luxury ($3M+)/market. Yes, your IRA isn’t going bananas like it was last year, but that doesn’t mean these companies are paying any less. Sure, they might not be hiring at-will or throwing extravagant holiday parties, but if you’re working in the Boston Area, you most likely will have one of the better salaries in the nation.
- Millennials are the largest generation and therefore the biggest purchasers of real estate, for every family bailing to South Carolina there are a dozen vying to live the downtown Boston dream.
So where does that leave us? Do I think the market is cooling? Yes. Do I think home prices are falling? That’s a loaded question, but overall no. I think they are correcting, not falling. I don’t foresee a scenario where a 1500′ sq foot home (@$1k/sq ft) suddenly becomes worth $1M or less. If you bought a 1500′ sq ft home for $2M then, yes, you might feel some pain for a year or more while things settle. Overall, low inventory is such a significant factor that I do not see a massive decline in home values for downtown Boston.
How does this help first-time Boston condo buyers?
- What you see is what you get. Listing and selling prices are finally more aligned.
- Contingencies exist for a reason and are back on the negotiation table, don’t be afraid to use them.
- Lenders want to help you get a loan—remember you can always refinance for lower rate.
- If you are in a position to entertain the idea of buying, and have enough saved for a deposit, then it is usually a safe time to buy.
Should Boston condo buyers try to attempt to time the market?
Attempting to time the market is a slippery slope and there will always be unforeseen curveballs, but inventory in downtown Boston will always be a significant factor you must calculate in contributing to Boston condo values.
Working with a Boston real estate agent is the best way to make sure you are searching and spending efficiently. I welcome the opportunity to learn more about your Boston condo aspirations.
Boston condos for sale and the bottom line
As always, if you have any questions, you can contact me directly at 617-595-3712, or throw me an email at realtyford@yahoo.com.
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