Boston real estate changes
Mortgage rates are much higher today than they were at the beginning of the year, and that’s had a clear impact on the Boston condo for sale market. As a result, the market is seeing a shift back toward the range of pre-pandemic levels for buyer demand and home sales.
But the transition back toward pre-pandemic levels isn’t a bad thing. In fact, the years leading up to the pandemic were some of the best the housing market has seen. That’s why, as the market undergoes this shift, it’s important to compare today not to the abnormal pandemic years, but to the most recent normal years to show how the current housing market is still strong.
Higher Mortgage Rates Are Moderating the Housing Market
The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s also a good indication of buyer demand over time. Here’s a look at their data going back to 2017 (see graph below):
Here’s a breakdown of the story this data tells:
- 2017 through early 2020 numbers (shown in gray) give a good baseline of pre-pandemic demand. The steady up and down trends seen in each of these years show typical seasonality in the market.
- The blue on the graph represents the pandemic years. The height of those blue bars indicates home showings skyrocketed during the pandemic.
- The most recent data (shown in green), indicates buyer demand is moderating back toward more pre-pandemic levels.
This shows that buyer demand is coming down from levels seen over the past two years, and the frenzy in real estate is easing because of higher mortgage rates. For you, that means buying your next home should be less challenging than it would’ve been during the pandemic because there is more inventory available.
Higher Mortgage Rates Slow the Once Frenzied Pace of Home Sales
As mortgage rates started to rise this year, other shifts began to occur too. One additional example is the slowing pace of home sales. Using data from the National Association of Realtors (NAR), here’s a look at existing home sales going all the way back to 2017. Much like the previous graph, a similar trend emerges (see graph below):
Again, the data paints a picture of the shift:
- The pre-pandemic years (shown in gray) establish a baseline of the number of existing home sales in more typical years.
- The pandemic years (shown in blue) exceeded the level of sales seen in previous years. That’s large because low mortgage rates during that time spurred buyer demand and home sales to new heights.
- This year (shown in green), the market is feeling the impact of higher mortgage rates and that’s moderating buyer demand (and by extension home sales). That’s why the expectation for home sales this year is closer to what the market saw in 2018-2019.
Why Is All of This Good News for You?
Both of those factors have opened up a window of opportunity for homeowners looking to move and for buyers looking to purchase a home. As demand moderates and the pace of home sales slows, housing inventory is able to grow – and that gives you more options for your home search.
So don’t let the headlines about the market cooling or moderating scare you. The housing market is still strong; it’s just easing off from the unsustainable frenzy it saw during the height of the pandemic – and that’s a good thing. It opens up new opportunities for you to find a home that meets your needs.
Boston condos for sale and the Bottom Line
The housing market is undergoing a shift because of higher mortgage rates, but the market is still strong. If you’ve been looking to buy a home over the last couple of years and it felt impossible to do, now may be your opportunity. Buying a home right now isn’t easy, but there is more opportunity for those who are looking.
Unquestionably, Boston has recently experienced a building boom in a few neighborhoods. Fenway, The Seaport, and North Station leap to mind. The possibilities to rent or to own real estate in those neighborhoods are endless. Commercial, residential and office opportunities abound in those areas. But what about the parts of Boston not experiencing a building boom? Some are going through a transformation of there own. Walking from Dartmouth Street along Boylston and turning onto Tremont up to Government Center, I was struck by the number of vacant store fronts. Some were long established and others less than 2 years old.
Firehouse Subs on Boylston has closed and Uburger on Tremont has as well. Both food establishments were in there location less than 3 years. Uburger will be replaced by a pasta restaurant. Its unknown what will take over the Firehouse Sub storefront . As I continued on Tremont Street I noticed Colonial Trading Company had brown paper in the windows. This antique, collectible and gift shop was in this location before the 1970s. According to a sign in the window, they have relocated to a smaller shop down on Bromfield Street. Another sign informed me a “coffee lounge” will be replacing them on Tremont Street.
Meanwhile, down on Charles Street where my office is located and a building hasn’t been erected in about 100 years, the retail real estate landscape continues to change. Beacon Hill Gourmet has closed after only a year in business. Insiders say a beauty shop will be going in the location. The old NRO shop on the corner of Pinckney street will be a pop up clothing store called Orange. This will be the second pop up shop in there since NRO closed in November. Peets Coffee and Teas is just about ready to open and the old Café Vanille has been replaced by Tatte Bakery and Café.
It seems more often than not when one shop goes out another comes right in. Sometimes with the same concept. I guess when a neighborhood is established some don’t see it as a gamble.
For more information on how to be a Boston condo owner please contact John Ford at 617-720-5454. You can also email at email@example.com
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Updated: January 2018