The local real estate market looks a different from the national market snapshot, which I summarized two weeks ago. Eastern Massachusetts has an acute housing shortage, and that is allowing a seller’s market to remain despite the high interest rates that are reducing a buyer’s spending power.

The bottom line is that prices are still going up. A recent Boston Globe article laid out the data:

Median-priced single-family home in the region: $910,000. This is an 8.3 percent increase from the same month last year.

Here’s the problem:

  • “With fewer properties available for sale, sellers are taking advantage by commanding top dollar,” said association president Alison Socha, an agent with Leading Edge Real Estate in Melrose. “We’re also seeing more multiple offer situations and sales over asking price which is putting additional upward pressure on prices.
  • Large numbers of sellers are not selling because they need to buy their next house at prevailing interest rates, which are high compared to the last 15 years.
  • Since the largest group of buyers are Boomers, having interest rates this high is turning them off and choking the supply of properties for sale.
    • They can’t really downsize because the cost of borrowing for their next place will be at around 7 percent.
    • They may as well stay in their current place where the mortgage is at about 3 percent.
    • Boomers who do not have the cash to purchase without a mortgage are stuck between a rock and a hard place. So, they stay put in their current house, with its low interest-rate (and mostly paid off) mortgage.
  • Because Boston is a coastal city and an old city, there is a dearth of land for building our way out of the supply shortage.

It’s not just single family houses. Condominium prices are up 7.8 percent from last year at this time. Median price is now at $735,000.

How bad is the local housing shortage?

According to that same Globe article:

It’s clear how powerful a deterrent higher mortgage rates have proven to be: Just 1,193 homes were on the market last month, around 30 percent fewer than the 1,700 available in July 2022. June and July are typically two of the busiest home-buying months, but activity this year has been the lowest the region has seen in more than a decade.

Only 1,063 single-family homes sold in July, a 23.4 percent drop from the same time last year. It was the lowest number of July sales recorded since 2010, and second fewest in the last 20 years. Condominium sales fell by 16.7 percent.

Boston area, compared to the rest of the country

Market volume

Nationally: Market volume is how many properties are changing hands. Seasonally adjusted market volume is down 23 percent from last year. This is still below pre-Covid levels.

Boston: Seasonally adjusted market volume is down 30 percent from last year at the time.

Home prices

National: Home prices are down 1 percent nationwide – this year.  The national report stated that Massachusetts was up 32 percent since Covid, 7 percent since this time last year.

Boston: Massachusetts prices are still going up. According to Boston Globe reporter Andrew Brinker, the Boston area is 8.3 percent higher this year.

Lucky us.