The Greater Boston housing market has shown remarkable resilience in 2023, defying downturn predictions. There was an increase in median listing prices, with a 15.1% rise from the previous year. The median listing price for homes in Boston was $984,000 in November 2023, with a median listing price per square foot of $874. However, home sales were down year-over-year in June 2023, but median sales prices remained stable at around $900,000 for single-family homes and $745,000 for condominiums.
On the other hand, Boston’s commercial multifamily market has been one of the fastest-growing markets for commercial multifamily residential construction in the U.S., with prices expected to increase further in 2024.
These trends are a testament to the underlying strength of the Boston housing market, supported by factors such as a robust labor market, solid consumer confidence, and limited inventory.
2024 might be slightly better for home buyers and renters than 2023 was, with mortgage rates trending down and housing units trending up. The Mortgage Bankers Association (MBA) anticipates 30-year rates starting in 2024 at 7.1% and gradually declining to 6.1% at the close of the year before dipping as low as 5.5% in 2025.
However, the Boston housing market has challenges.
The ongoing supply chain disruptions have continued to push up the cost of building materials, putting upward pressure on home prices and reducing the overall number of new units.
As reported in the Boston Globe article, “The $600,000 Challenge,” “Many forces drive the housing crisis here, and the sky-high cost of construction is one of the most powerful.”
Looking Ahead
Look for a trend towards normalcy in Boston in 2024. Retreating mortgage rates will bring more buyers and sellers to the market. Sales could rise by as much as 15 percent in 2024. We are not expecting sales to increase dramatically, as rates will likely remain above 6 percent.
Home price growth is forecast to slow to below 10%, down from the 15% pace seen in 2023. The Boston housing market is expected to remain resilient in 2024. The strong labor market and solid consumer confidence will continue to support demand. Additionally, the limited inventory of homes for sale is expected to help prop up prices.
Nationally, here are some housing trends to keep an eye on.
- Home sales: Home sales will remain flat in the fourth quarter of 2023 compared to last year despite rising mortgage rates. This suggests that the market is stabilizing after a period of decline.
- Price growth: Home price growth is expected to slow down in 2024, averaging 3% compared to 3.8% in 2023. However, it is still projected to remain above pre-pandemic levels.
- Drivers of growth: The main drivers of home price growth are low inventory, particularly in the West, the migration of higher-income households, equity-rich baby boomers, and a strong U.S. job market.
- Regional variations: There are significant regional variations in home price growth. Some metros with the most robust growth in 2023 include Detroit, New York, Las Vegas, Phoenix, Boston, Miami, Tampa, and Charlotte. These markets often experienced home price declines in 2022 or lagged in appreciation during the pandemic. In contrast, Seattle, Minneapolis, Portland, and Denver have seen weaker price growth.
- Price tiers: The high-price tier has seen a relatively more robust rebound in September, with a 2.8% annual increase. This may be due to migration trends, with higher-income households moving to somewhat less expensive areas with more temperate weather. The low-price tier also saw substantial gains in September, with a 3.7% increase. Gains led this in Miami, Chicago, and Boston.
- Month-over-month trends: The month-over-month comparison of appreciation by price tier and location also reveals relative changes in demand across the country. In September, Las Vegas and Tampa led the gains in the high tier, while Miami, Chicago, and Boston led the increases in the low-price tier.
Overall, the U.S. housing market is expected to remain stable or relatively normal soon, with continued home price growth but at a slower pace than in 2023. The main drivers of home price growth are low inventory, migration, demographics, and a strong job market.
- Sources:
https://www.corelogic.com/intelligence/us-corelogic-sampp-case-shiller-index-annual-growth-moves-higher-september/ - https://apps.bostonglobe.com/2023/10/special-projects/spotlight-boston-housing/construction-costs/
- https://www.nerdwallet.com/article/mortgages/2024-homebuying-trends-property-line-november-2023
- https://www.travelandleisure.com/best-places-to-live-on-the-east-coast-7107398?utm_source=emailshare&utm_medium=social&utm_campaign=shareurlbuttons
- https://story.in.mg/721/article-understanding-the-rising-costs-of-homeownership-mortgage-rates-and-housing-market-trends/