2023 Boston Real Estate Sales Market Report

Boston’s real estate market saw total property sales crater during the final quarter of 2022 amidst rising interest rates and a sluggish economy. The city’s 30 day median sales price took a nosedive in December as a result, dropping $67.5K compared to November 2022.  With inflation still high, incoherent energy policies, tech layoffs and more rate hikes forthcoming; it appears like Boston’s real estate market maybe sliding towards a period of challenging times.

Total Real Estate Sales in December Down 43% YOY In Boston

Total sales for Boston real estate in December (347) marked a -43.76% drop compared to December 2022. Total sales for January 2022 fell ever further to 321.  Even worse, Boston recorded 1,099 total real estate sales in MLS during Q4 2022 for all property types, which was the lowest Q4 total in the past 5 years.  Without a doubt, the Fed raising interest rates 7 times last year put a damper on demand for real estate in Boston.

The Federal Reserve again rose interest rates last week and will likely do so again when they reconvene in March as long as the CPI is above their target of 2%.  As a result, the MBA purchase index which measures the number of nationwide home loan applications hit a 5 year low last month and is hovering around 2010 levels.

Boston’s Median Sale Price Drops Sharply

Boston’s median sale price for all property types dropped to $738,876 in December, a -3.16% decrease compared to December 2021.  That marked the first time Boston’s YOY median sale price fell into red figures since May 2021.  The December median sale price is down $67.5K compared to November and down $137,215 from its all-time high of $876K set in April of 2021.  January’s median sale price finished at $794K, up slightly (+4.18%) from January 2022.

Boston Single Family Market Report

Boston’s 30 day median sale price for single family homes stayed below $760K throughout Q4 2022, which is the first time that has happened since Q3 2020.  Total sales for single family homes fell short of 200 during the final quarter, the lowest Q4 sales total in the last 5 years by far in Boston. Price per square foot for single family homes in Boston also fell by double digit margins (-11.82%).  

January single-family home sales slipped even further to 45 to start 2023, another 5-year low for January.  Median sale price did increase to $821K surprisingly for single-family homes.  However, median days on market is also nearing a 5-year high for single family properties (38 days) in Boston, which points to demand destruction.

Boston Condo Market Report

Total condo sales also hit a 5 year low in Boston in Q4 of 2022.  754 Boston condos were sold in Q4 2022, down from 1,154 in Q4 2021, 1,011 in Q4 2020, and 982 in Q4 2019.  As a result, the median sale price for Boston condos fell $116K through Q4, down from $805K in October 2022 to $689K by December.  The price per square foot for condos in Boston also fell below the $800 mark for the first time since September 2021.

January numbers for multi-family were not too promising.  Total sales fell to their lowest level since May and June of 2020 and median sale price fell under the $1M level.  Median days on market are also at a 5 year high (43 days) for multi-family properties in Boston.

Boston Multi-family Q4 2022 Market Report 

There were 149 multifamily sales during the final quarter of 2022, which was also a 5 year low in Boston.  While prices for Boston multi-family homes have remained steady amidst a shortage of available multifamily properties, look for prices to cool off in 2023.  Price per square foot for multifamily properties hovered around $400 throughout most of the past 12 months, but also trended downwards during Q4 in Boston.

January numbers for multi-family were not too promising.  Total sales fell to their lowest level since May and June of 2020 and median sale price fell under the $1M level.  Median days on market are also at a 5 year high (43 days) for multi-family properties in Boston.

2023 Boston Real Estate Market Predictions

Based on the current market and economic conditions, look for real estate prices to either flatline or fall slightly in many Greater Boston neighborhoods during the first half of 2023.  There will be several neighborhoods that could remain resilient to stagnant prices and we will dive further into that conversation in a subsequent article.  Overall, It is really difficult to increase property prices with the Fed continuing it’s relentless crusade to bring runaway inflation under control.  While we have seen a little bit of an improvement in mortgage applications and inflation numbers in January, that could be short lived.  The strong jobs report may cause the policy makers to continue to raise rates which could further weaken the footing of the overall real estate market.  Higher interest rates nearly always pushmore potential buyers away from purchasing in the real estate market unless we see significant price corrections.

It’s also likely that the eventual price reductions we see for Boston real estate will probably be less than what we see at a national level.  Given the extremely tight supply of for sale properties in metro Boston, prices will likely not drop as severely as in other markets. Overall volume of transactions are going to be down unless significant break out patterns occur in labor market and or financial uncertainty due to inflation cause selling through necessity.  From an emotional stand point, it is very difficult for many home owners to leave 3-4% interest rates and go buy another property with a much higher rate unless they are downsizing.

Inflation and how the Fed determines how to combat it will be a major player in home prices and volume of sales in 2023.  The latest CPI figures from December show that inflation is easing compared to previous months.  However, the inflation rate is still well above the 2% target suggesting that more rate hikes are in our future.  If CPI continues to fall closer to that 2% level through the first half of 2023, we could see prices continue to trend back upwards during the second half of the year.   This real estate year will be a nail biter to see if break out patterns start to develop.  As always we will be here to deliver you the data to make your own empowering decisions.  If you are a homeowner or real estate investor seeking advice on a specific neighborhood or asset class – we are here for you.   Please feel free to reach out to us directly for advice.