Over the past two years, the Boston real estate market has surged.
With a pandemic in full force, many homeowners have decided now is not the best time to move out of their homes. With a lack of available homes, the Boston real estate market has turned fierce with back-to-back years of record-high market prices.
With the market surging, does that also mean that now is a good time to invest in Boston real estate?
Boston Real Estate, By the Numbers
- Median homes in Boston sold for $750,000 in 2021, which is up 10.5% from the previous year
- Condo sales are also up 32% - prices jumping 6.6% higher than the prior-year
- Statewide the price of houses are up 10.7% in January 2022 compared to 2021
- There’s a higher demand for housing than supply creating buyer urgency in the market
Considering these trends, what should investors expect in Boston for the rest of 2022?
Boston Real Estate Market Forecast 2022
Many real estate agents have started to see more houses enter the market as the pandemic has slowed the more we get into 2022. Yet, they’ve also seen more buyers enter the market as well. So the fact that there are more sellers doesn’t necessarily mean there will be a decrease in competition or buyer urgency.
A popular prediction amongst experts is an increase in buyer interest in returning to downtown Boston. A few months into the pandemic, there was a spike in buyer interest in suburban homes as everyone was looking for space and comfort. Now that the pandemic has started to slow down, there should be a natural interest in returning to the city.
Listed below are additional real estate market projections for 2022:
- Economists predict that the existing home prices will increase by 7.5% in the Boston Metro area. In addition, the national home price is projected to increase by 2.9% annually.
- According to experts, the housing market in Boston is expected to be more balanced than in the past few years as the pandemic cools.
- With the projected end-of-year mortgage rate increase, there will likely be a rush to buy new homes at the start and middle of the year
- The city centers and the condo market should remain attractive to home buyers.
Potential Impact of Rising Interest Rates on the Housing Market
Although the housing market looks promising, it is important to keep an eye on rising interest rates across America.
In early December 2021, the 30-year fixed mortgage rate jumped to 3.12%. By the end of Q1 2022, rates jumped to 4.60% for 30-year fixed mortgages. Much of this increase is due to rising interest rates across America.
Interest rates are projected to continue to rise six more times throughout 2022 with the Federal Funds rate closing in towards 2%.
If interest rates continue to increase, the housing market could potentially see a decline in buyer demand due to increasing costs.
Is Boston a Good Real Estate Investment?
With so much uncertainty still in the market, it can be challenging to know what exactly will happen by the end of the year. Below, we’ll examine investing in Boston real estate from both a short-term and long-term perspective.
Is Boston Real Estate A Good Short-Term Investment?
If the Boston real estate market increases or equals how it performed over the previous two years, then the market could potentially be a good short-term investment. However, keep in mind that short-term investments are potentially high-risk, high-reward situations.
Is Boston Real Estate A Good Long-Term Investment?
The safer play would be to view the market as a long-term investment. Focus on finding a beautiful home in a great neighborhood with market history.
Another perspective to consider is that the Boston population has grown annually. The latest Census data shows Boston grew by 9.3% from 2010-to 2020. Even through the pandemic, Boston still saw positive annual growth, with the population growing from 4,307,000 in 2019 to 4,327,000 in 2022.
These are great statistics to consider if viewing Boston real estate as a long-term investment. With interest in Boston continuing to grow, there should be a natural increase in competition and overall home market value.
Also, economic experts predict the economy should pick back up after being slowed by the pandemic. If so, Boston-area real estate prices could likely see further gains.
Additional Real Estate Factors to Consider
Source: Zillow
The continual growth makes real estate in Boston an excellent investment for the long term. Still, it doesn’t mean that those looking for a way to make money quickly by flipping houses should invest here without careful consideration and research.
Housing has seen steady growth in property values over the last eight years. Increasing property values indicate strong real estate investments, which is good news for those who already own homes.
The Boston area often has great appreciation rates, which is a strong asset for long-term real estate investors. The appreciation can then be utilized through HELOCs and refinances that allow investors to tap into their equity tax-free, or through the sale of their property.
All of these factors combined make Boston a good long-term real estate investment.
5 Reasons To Invest In The Boston Real Estate Market
Here are a few of the top reasons to invest in the Boston real estate market:
- Increasing City Population
- Rising Property Value
- Low supply, High Demand
- Historically strong ROI
- Strong Job Market
Final Thoughts On Boston Real Estate Investments
With the Boston real estate market on a streak of back-to-back record-breaking years, there’s a lot of optimism about future market potential.
Remember, the real estate market can be challenging and is best navigated with the help of a real estate expert. Whether providing statistics for reference or offering assistance in finding the right real estate investment, a real estate expert can be a valuable resource for investors.
Boston should definitely be at the top of your list if you’re looking for a place to call home or are interested in investing in property. Contact GenTeam Property Group today to get started on finding your dream home in this amazing city!
Sources
https://www.bostonglobe.com/2022/01/19/business/2021-set-records-bostons-housing-market-what-now/
