For the second month in a row, prices for single-family homes and condos in Massachusetts set new records in March, according to a new Warren Group report.
The continued growth of median sales prices, which showed no signs of slowing down, coincided with significant declines in activity in the Bay State.
The statewide median single-family home price grew 4.9% to $540,000, up from $515,000 last year, marking a new all-time high for March. That price growth, however, came with fewer sales.
The Warren Group’s March sales report found that Massachusetts single-family home sales fell 23.4% to 2,756 from 3,600 a year ago.
Cassidy Norton, associate publisher and media relations director of the Warren Group said those single-family home sales marked the fewest transactions in March since 2011.
“A lack of inventory across Massachusetts continues to be the biggest factor in the declining sales volume,” Norton said. “But, when paired with rising interest rates and uncertainties about the economy, we can expect to see similar trends as the spring housing market starts to heat up.”
Since January, 7,184 homes sold, down 26.2% from the first three months of 2022. During the same period, the year-to-date median single-family home price rose 2.2% to $510,000.
Meanwhile, the median condominium sale price increased 7.5% to $500,000 in March. Yet, condo sales posted another decline last month, falling 22% from last year to 1,525.
“Once again, the condo market followed almost identical trends as the single-family market,” Norton said. “However, with rising interest rates and single-family home prices setting new records, condos might be a slightly more affordable option for homeownership for prospective buyers across Massachusetts.”
So far this year, 3,720 condos sold across the state, down 24.9% from 2022, with a median sale price that’s up 6.7% to $480,000.
While rising interest rates have begun to slow an overheated Boston condo for sale market as monthly mortgage payments have risen dramatically since the beginning of the year. This is leaving some Bostonians who want to purchase a Beacon Hill or Back Bay condo priced out of the market and others wondering if now is the time to buy one. But this rise in borrowing cost shows no signs of letting up soon.
Economic uncertainty and the volatility of the financial markets are causing mortgage rates to rise. George Ratiu, Senior Economist and Manager of Economic Research at realtor.com, says this:
“While even two months ago rates above 7% may have seemed unthinkable, at the current pace, we can expect rates to surpass that level in the next three months.”
So, is now the right time to buy a home? Anyone thinking about buying a home today should ask themselves two questions:
1. Where Do I Think Boston Condo for Sale Prices Are Heading?
There are two places to turn to answer this question. First is the consensus of what experts are saying. If you look at what experts are projecting for home prices in 2023, they’re forecasting home price appreciation around 2%. While it’s true some are calling for depreciation, most are calling for appreciation in home values over the next year.
The second spot to turn to for information is the Home Price Expectation Survey from Pulsenomics – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists. According to the latest release, the experts surveyed are also calling for home price appreciation for the next several years (see graph below):
2. Where Do I Think Interest Rates Are Heading?
Like mentioned above, Ratiu sees mortgage rates rising over the next several months. Another expert agrees. Mark Fleming, Chief Economist at First American, says:
“While mortgage rates are expected to continue to drift higher over the coming months, much of the rapid increase in rates is likely behind us.”
The instability in the world and higher inflation are driving this volatile market, resulting in higher borrowing rates for those looking to buy homes.
Boston Condos for Sale and the Bottom Line
If you’re thinking about buying a home, asking yourself about home prices and mortgage rates will help you make a powerful and confident decision. Experts see both prices and rates rising in the future. The alternative is to rent, but rents are also increasing. That may mean buying a home makes more sense than renting an apartment.