Why are Boston condo prices still rising?
Updated: Boston Real Estate Blog 2025
Byline – John Ford Beacon Hill Condo Broker
Why are Boston condo prices still rising?
Boston Real Estate and Condos for Sale
Why are Boston condo prices still rising?
If you’ve seen headlines or social posts calling for a housing crash, it’s easy to wonder if home values are about to take a hit. But here’s the simple truth.
The data doesn’t point to a crash. It points to slow, continued growth.
And sure, it’s going to vary by local area. Some markets will see prices rise more than others. And some may even see small, short-term declines. But the big picture is: home prices are expected to rise nationally, not fall, over the next 5 years.
The Real Story Is in the Expert Forecasts
In the Home Price Expectations Survey (HPES) from Fannie Mae, each quarter over 100 leading housing market experts weigh in on where they project home prices will go from here. And in the report that was just released, the experts agree prices are projected to climb nationally through at least 2029 (see graph below):
Here’s how to read this visual. Each bar in that graph shows an increase, not a loss. It’s just that the anticipated pace of that appreciation varies year-to-year.
And to further drive this home, let’s look at another view of where prices are and where they’re expected to go. In this version, the expert forecasts are broken into 3 categories: the overall average, the most optimistic projections, and the most pessimistic projections (see chart below):
Notice how even the most pessimistic forecasters say we’ll see prices rise by almost 5% over the next few years.
- Overall, prices are expected to rise about 15% from now through the end of 2029.
- The optimists say we’ll beat that and see a roughly 26% increase.
- And even the pessimists anticipate prices will go up by 5% during that period.
What sticks out the most? None of these groups who study the market are forecasting a crash, or even a decline, over the next 5 years.
How This Compares to “Normal” for the Market
Now, focus back on the first graph. The projections call for 2-3.5% price increases in each of the next five years. For context, the average rate of appreciation for the last 25 years was closer to 4-5% annually.
So, while that’s slightly below the historical average, it’s much more sustainable and typical than where the market was in 2020, 2021, and 2022.
Back then, prices rose too much, too fast based on record-low supply and record-high demand. Some places even saw prices climb by 15-20%.
So, while it may feel like prices are stalling compared to those pandemic-era surges, what’s really happening is that the market is finally finding balance again.
Why Prices Aren’t Expected To Crash
A lot of the chatter about home prices today is based on that rapid rise and the old saying that what goes up, must come down. But historically, that’s not really true. Home prices almost always rise.
And the main reason we’re not heading for a repeat of 2008 is simple: supply and demand.
Even though affordability challenges have made it harder for some people to buy over the past few years, there still aren’t enough homes for everyone who wants one. And that ongoing shortage is keeping upward pressure on prices nationally.
That’s why experts across the board can confidently agree: we’re not headed for a price collapse, but for steady, long-term appreciation.
And just in case it’s the economy that’s got you worried, remember this. Over the past 50 years, there have been plenty of economic events that have impacted the market. And one thing that’s consistently been true throughout time is the housing market always recovers. And we’re coming through that turn right now and going into a recovery.
South Boston Condos for Sale and the Bottom Line
If you’ve been waiting to buy or sell because you’re worried about a crash, it’s time to look at the data – not the headlines.
The question isn’t if home prices will rise, it’s by how much.
Why are Boston condo prices still rising?
Why are Boston condo prices still rising?
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Why are Boston condo prices still rising?
The following metro areas had year-over-year median home price increases of 10% or more since September 2022:
- Los Angeles: 23.8%
- San Diego: 18.2%
- Richmond: 15%
- Cincinnati, Ohio: 14.6%
- Providence, Rhode Island and Massachusetts: 14.6%
- Boston: 14.1%
- Columbus, Ohio: 12.1%
- Rochester, New York: 11.4%
- Pittsburgh: 10.6%
- Chicago: 10.3%
- Indianapolis: 10%
In almost all of these cities, prices leveled off or decreased in late 2022, only to rise again in 2023, according to Realtor.com data.
Why are Boston condo prices still rising?
As is the case nationally, home prices have risen in these places because there are simply not enough homes built to meet demand, says Danielle Hale, chief economist at Realtor.com.
Are Boston real estate prices rising or coming down in 2024?
Although Boston condo prices are on the rise, however, apartment rental rates in downtown Boston are down. This, too, is in keeping with a trend we’ve seen in other, more expensive metros like New York City and San Francisco.
Why are Boston condo prices still rising?
Boston condo for sale prices are on the rise – the topic that has been in the news, including here.
The fallout from the pandemic has undoubtedly made its mark on all aspects of the economy. But the housing market differs from other industries in that it’s stronger than ever… for the seller. High demand and low interest rates keep pushing home prices up, igniting bidding wars across the nation. According to Realtor.com, median sale prices went up 17.2% year over year in April. Now, that number is so large partly because at this time last year we were hitting the worst of the pandemic for the real estate market. But the median home price – $375,000 – still marked a record high.
But for how long will real estate prices continue to rise?
If you’re a downtown Boston condo buyer, you may be pondering to wait out the market? If you’re selling, you may want to know how quickly to list your home. To demystify what’s happening in the Boston real estate market right now (and in the future), let’s take a close-up look at why prices are so high right now, what will curb that rise, and when the experts expect that to happen.
What’s Causing Home Prices to Increase?
First off, let’s understand why what causes Boston real estate prices to rise, and which are at play right now. It’s possible you’ve heard nervous chatter about the possibility of another housing bubble, like the one that caused the 2008 recession. We won’t go into too many details. But safe to say that nearly every expert out there agrees we aren’t in the same situation as we were in 2008. At that time, banks were regularly approving subprime mortgages, subprime borrowers were accepting them, and there was a surplus of construction.
Now, what we’re looking at is an actual, rather than “artificial” demand, and low supply. Here’s a breakdown of how that came to be:
- Covid (and Pre-Covid) Demand. The suburbs had already risen in popularity before the global pandemic drove more and more people to want more and more space. Single-family homes then became the most desired, and also the least listed.
- Lumber Prices Up. Lumber prices have soared even more than home prices since the onset of Covid-19. The National Association of Homebuilder’s clocks that rise at 300% since April 2020. Their estimate puts that at $36,000 added to the price of a new home.
- Low-Interest Rates. The pandemic has kept interest rates at reasonable, or even record-breaking lows. That makes buying a home more attainable for consumers.
- Millennials. Love ’em, hate ’em: millennials are now one of the largest demographic groups in the nation. And they’re entering the age at which many people choose to buy a home. Supply, meet demand.
What Needs to Happen to Stem Rising Home Prices?
So we’ve got a handle on why home prices are increasing. But what needs to happen in order for them to decrease? Any combination of the following factors would stem the flow of rising home prices.
- More New Construction. Partly due to the high lumber prices referenced above, new construction has slowed. April saw a big hit, according to the U.S. Census. New starts for single-family homes dropped by 13.4% from March to April. With supply at a low, a surge in new construction would slake demand.
- More Existing Homes for Sale. Likewise, if a flood of existing homes came on the market, balance would be restored. In the past three months, existing home sales have consistently declined, according to the National Association of Realtors.
- Buyers Being Priced Out of the Market. Whether due to higher interest rates or a continuous rise in home prices, if enough buyers get priced out of the market, supply and demand will find a better balance. Buyer pessimism is at an all-time high, as the latest statistics from Fannie Mae’s Home Purchase Sentiment Index show. The question everyone is waiting on, then, is when will buyer pessimism outweigh buyer determination
Updated: Boston Real Estate Blog 2023
Byline – John Ford Beacon Hill Condo Broker
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Will Home Prices Rise in 2022?
So, when can we expect some of these counteracting influences to kick in? There’s no strict formula to predicting the future of the housing market. But we can turn to some of the country’s top experts for reasonable expectations. With an eye towards that expertise, we’ve gathered up the following projections from trusted analysts.
- The National Association of Realtors’ chief economist, Lawrence Yun, has publicly stated to the New York Times, Vox, and others that he believes prices will continue to rise but not at the current rate. In the short term, rising prices and bidding wars are likely to continue. But as early as the last quarter of 2021, interest rates may go up. Yun predicts that in the coming year we’ll see a decline in multiple offers but that prices will still be higher than they are now – just not astronomically.
- In early May, Ali Wolf, chief economist at building consultancy Zonda, made a similar statement to Realtor.com. Wolf postulates that prices will continue to rise, but again, at a slower pace as we enter 2022.
- CoreLogic, an analytics company that provides the leading data on housing prices, recently tipped Forbes to look towards the end of the year when more buyers will be priced out. They predict more new construction and lower demand.
Will Home Prices Decrease in 2022?
The predictions we’ve gathered above do seem to reach a consensus. According to the experts, there won’t be a bubble that suddenly pops. Instead, prices are likely to continue increasing, just at a more gradual pace as the market recovers from the aberration that is Covid-19.
Remember, though, that moderately increasing prices isn’t necessarily all bad news for buyers! Not a lot of people buy property without expecting it to appreciate. On top of that, we’ve reached a time of year during which home prices typically go up. There are ways to get the best price possible – from working with a top agent to knowing the best time of year to buy or sell. And for those who are feeling priced out, don’t count out down payment assistance programs, which the Biden administration has plans to expand upon.
When you’re ready to take the plunge, get in touch with our Ford Realty Inc team. They’re prepared to get you the most out of your real estate transaction, no matter what the market is up to!
Boston Real Estate and Condos for Sale
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Why are Boston condo prices still rising? It is a simple answer. There are more purchasers in the market right now than there is available Boston condo for them to buy. Especially under the $500,000 price point. This is an example of the theory of “supply and demand” which is defined as:
“The amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”
When demand exceeds supply, prices go up. This is currently happening in the residential real estate market.
Here are the numbers for supply and demand as compared to last year for the last three months (March numbers are not yet available):
In each of the last three months, demand (buyer traffic) has increased as compared to last year while supply (the number of available listings) has decreased. If this situation persists, home values will continue to increase.
Boston Real Estate and the Bottom Line
The reason home prices are still rising is that there are many purchasers looking to buy, but very few homeowners ready to sell. This imbalance is the reason prices will remain on the uptick
