Boston Condos for Sale and Apartments for Rent
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Boston condo mortgage rates have doubled in one year
Purchasing a Boston condo for sale is getting harder, with mortgage rates on the rise again as the summer comes to a close. The average 30-year Boston condo mortgage is now 5.55%, according to data from Freddie Mac. Mortgage rates are now almost double what they were one year ago, and the latest data highlights the impact the increases are having on the cost of borrowing and there will be more interest rate hikes still to come for 2022.
A year-ago 30-year interest rates were 2.87%. Freddie Mac clocked the average 30-year, fixed-rate mortgage at 5.55%, up from 5.13% one week earlier.
Boston Condo Recession is at Hand
National Association of Realtors Chief Economist Lawrence Yun proclaimed that the U.S. is now experiencing a “housing recession”, with existing home sales falling 20% from a year ago. At the same time, new contract signings have also fallen by 20%, suggesting that things will only get worse as the year progresses. Moreover, there’s been a significant downturn in new home sales, which fell by 30% annually in July.
Home buyers are hampered by strong home price growth
In a blog post, NAR Senior Economist and Director of Forecasting Nadia Evangelou said buyers are being further hampered by strong home price growth, which are still up by double-digits compared to a year earlier. She wrote that a median-priced home now costs around $40,000 more than it did one year ago. However, while increased prices drive costs up, the rising rates do so even more. An increase of just one percentage point in mortgage rates has the same effect on mortgage payments as if home prices rose by 13 percentage points, Evangelou said.
The NAR said this week homes haven’t been this unaffordable since 1989. Increasing rates have made borrowing more expensive. In July, the typical monthly mortgage payment was almost $2,000 per month, up 54% from a year ago.
My Boston condo thoughts
I think as long as the Fed combats inflation with higher interest rates we will see a slowdown in the Boston condo for sale market, especially in the winter months as the Fed Chairman sees rate increases through the end of 2022.
Boston condo price reductions will be an arduous process as Boston condo sellers are sitting on a lot of equity and are not pressured to sell.
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