The simple answer I feel that the market has peaked but, If you’re a Boston condo buyer thinking prices will drop I wouldn’t hold my breath. I think price appreciation will stall but I don’t see any major price drops.
However, not everyone agrees with me.
Click Here to view: Google Ford Realty Inc Reviews
Will higher interest rates impact the Boston condo market in 2022?
Byron and Nicole break down an article discussing a possible sales dip due to an anticipated retreat in demand. Article two is all about the current conflict in Europe and how it could affect the US housing market long term. Finally to round out the episode the pair go over 6 tips from Tom Toole on how to heat up chilly leads.
Before I even launch into this I need to mention that real estate is local. There are always nationwide trends and they are important but base your decisions about buying or selling real estate mostly on the local numbers and market conditions.
Housing is in the news a lot lately and I think it is at least partly because during the last recession the housing market crashed. The pain is still fresh for many and they may be worried about the value of their real estate.
Fear not the value of your real estate in downtown Boston condo market continues to rise.
I am seeing news about how nationally July pending home sales were up from June pending home sales. (NAR)
I believe that activity slowed during the lockdowns and what we are seeing in those pending sales is activity from March and April postponed until recently.
There is news about how the housing market is recovering. That implies that something bad happened that we needed to recover from. I don’t see it except for the fact that there are fewer homes on the market and they are more expensive than ever. We definitely have not recovered from that.
It is hard to determine what the long term effect of the pandemic will be on housing or even the full impact in 2020. I am not the first to say that we don’t have a similar event we can compare the pandemic to.
It is a good sign that after home sales fell during the “stay at home order” they rebounded again. I will need a few more months’ data before I am convinced that it is time for the happy dance.
Increasingly people are worried that the Boston condo for sale market, has it reached the top of the value and will the market may crash in the next two to three years. Although things are very much different from the last housing market crash in 2008, the fear is very much alive and people wonder whether the same crash may occur. As a Boston Downtown condo broker with an active housing market blog, I pay a great deal of attention to studying where our market is headed in the future. There are some signs that make people nervous about whether we are in a bubble and this is about to crash anytime from 2019 to 2021. Boston condo home values have been increasing rapidly for the last few years and we have surpassed the top home value at the height of the 2006 real estate bubble. It has been 12 years since the last bubble and there has been a great deal of inflation not accounted for in those numbers. Still, the way the prices have been with home bidding wars, it makes one nervous. This year, Boston downtown/midtown condo values have not increased much but mortgage rates having been rising as we are pushing high 4% at the moment. That is a big increase since 2016 although historically 5% is still considered low. There has been a great amount of slowdown since the summer of 2018. Compared to the last few years, housing inventory is also increasing and there is even a talk about a possible recession in the next two to four years. It may seem like we are at the height of the housing market and this sluggish market does seem like the inflection point before the market comes crashing down. But is that true? After all, many of us still have nightmares about the real estate market crash from the last recession. Things are much different this time and should there be a recession in the stock market, the housing market may still be strong this time around.
There is a lot of confusing and contradicting information out there at this point. Many real estate market experts have written about where our housing market is headed. Most of the expert opinions are based on national housing market trends and less specific to the Boston Midtown area and the Boston Beacon Hill condo market but our market is not that independent from the national trends such as rising mortgage rates, the overall economy and any political impacts that can affect us here. Locally, we look at the local job market here in the Boston metro and determine the supply versus demand more unique to the region. Big fundamentals, however, seem to coincide with the national trends.
As a disclaimer, neither I nor any economists or experts have a crystal ball to see what the future looks like so take everything you read with a grain of salt. Let’s consider all the questions below to understand better what is ahead of us.
For the last many years, we have had a very low supply of homes. In a normal housing market, there needs to be six months of inventory. This means that if 1,000 homes are sold every month, there needs to be 6,000 homes currently listed for sale. We have only had around two months of home inventory. As of this month in 2018, we have 2.7 months of inventory, which is better than 2.0 months of inventory in 2017, but still far less inventory from a normal and balanced housing market. The demand, on the other hand, is big. Millennials are a huge force in the housing market now as they are getting older and because of their sheer number of population. They either already have bought or want to buy homes as many of them have solid jobs and qualify for a mortgage. Like many residents here, many millennials have been priced out and have been waiting to buy homes due to how competitive it has been. This is a big sleeping giant of demand in the housing market. As soon as the affordability improves or their income improves, they are going to purchase. Nationally, similar trends exist: low supply and high demand but the big issue is affordability.
The job market is great in the Boston area. 3.7% is Boston’s unemployment rate as of 2018, which is extremely low. Many of the jobs are from the service sector but overall our local economy is at its full swing. The job and population growth have been slowing this year. Just recently, State Street announced 1,500 layoffs most will be with senior high paying positions. I actually know two individuals that have been impacted by these layoffs.
The U.S. economy enjoyed a very long expansion phase lasting nearly 10 years since the Great Recession, which by the way has been the second longest expansion phase in the history. So statistically, a recession is overdue. Accordingly, many economists surveyed by the Wall Street Journal believe that a recession is coming around 2020 or 2021. The reason for the recession is the Federal Reserve’s tightening monetary policy, which basically means raising interest rates to fight inflation.