Boston Real Estate Market May Soften for Buyers in 2022
Real estate sales in the city of Boston have slowed over the first few months of 2022, indicating a cooling housing market. Since the beginning of the year, the average 30-year fixed APR has increased by over 70%, as rates jumped from 3.183% to 5.422%. This has slightly softened the market for buyers, as the total number of listings on market has increased since January. While home prices have increased so far in 2022, they’ll likely decelerate during the latter half of the year considering both housing supply and interest rates are on the rise.
Boston’s Real Estate Inventory Growing While Number of Property Sales Sluggish
Boston’s total inventory of for sale properties has been growing steadily over the first four months of 2022. We began the year with 90 single family homes for sale in Boston. The supply of single family properties has since increased to 162 for-sale units as of May 1. That marks an 80% increase in the city’s total single family inventory since the beginning of 2022.
A look at the total inventory of Boston condos for sale reveals a similar trend. There were 654 condo listings active in Boston on January 1. As of the beginning of May, that number had increased to 1,044, marking a 59.63% increase in total condo inventory through the first 4 months of 2022.
With the exception of a busy April, property sales have also shown signs of slowing through the first few months of the year. In Q4 of 2021, the city of Boston recorded 291 single family home sales. In Q1 of 2022, that number had decreased by 33.68% to just 193 single family home sales. Total condo sales fell from 1,200 in Q4 of last year to 978 in Q1 of 2022.
Prices Remain High For Now But Price Corrections Imminent
Despite sluggish sales and rising supply of properties, Boston real estate prices have still increased by considerable margins since January 1. The 90 day median sale price for single family homes in Boston began the year at $758K. As of March 1, 2022, that figure had risen by 11.48% to $845K. Prices for condos in Boston have risen by 8.09% during the same time period, hitting $762K on May 1 compared to $705K at the beginning of the year.
The increase in median sale prices could be attributed to inflation and/or buyers’ fear of loss amidst rising interest rates. Buyers may have been eager to close on a home early in 2022 with interest rate hikes forthcoming, perhaps even paying above market value to lock in a lower interest rate. With the recent rate increases and rising supply of homes for sale, these price increases will likely level off and could potentially experience a downturn during the latter half of 2022.
After years of desolate inventory and rising prices, Boston home-buyers may be better positioned this year. We’ll likely see home prices flatten and perhaps even decline as more properties hit the market and buyers are priced out by higher rates. We will continue to monitor this MLS data throughout the year and report on notable changes.