The Greater Boston housing market, over the past two years, has become a complex stage of 14.9% home value appreciation set against the backdrop of interest rates spiraling from 3% to 6.5%. This dynamic has escalated the cost of an average single-family home by a significant 73% since spring 2021.
The plot thickens with interest rates now at 7.2%, further inflating the same home's cost by 85% compared to two years ago.
Prospective buyers, even with good credit and a 20% down payment, face the reality of home costs that are nearly double - 97.5% higher - than just two years ago if interest rates spike another half point by the end of the year, as the Fed has indicated they probably will.
An interesting undercurrent in the market has been sellers boosting their asking prices based on recent sales, instead of looking at the asking prices of those comparable homes, which has led to a gradual buildup of unsold properties in hot markets like Arlington and Melrose, as buyers display caution.
Linda O'Koniewski, CEO of Leading Edge, observes, "These shifts are significant economic indicators requiring keen attention and understanding." Despite potential challenges, buyers remain motivated to act before potential further hikes make borrowing even more expensive. As O'Koniewski aptly notes, "Buyers are eager to secure their purchase in anticipation of potential further rate hikes.”
In the Greater Boston housing market, careful analysis and strategic decision-making continue to be key.
The following are location-specific overviews of market changes year-over-year, for a sampling of neighborhoods in the Greater Boston Area. Don't see your town listed? Contact me for a custom report!