As we enter the second half of 2023, Boston’s real estate market has slowed significantly. Total residential real estate sales are down -27.94% in the first 6 months of 2023 compared to last year for all property types. Amazingly, despite the drop in demand for Boston real estate, median sale prices remain high thanks to a shortage of properties for sale. Here are the main trends influencing the Boston real estate market.
Total Real Estate Sales Down in Boston, Prices Remain High
There were 2,443 total residential real estate transactions in Boston through the first half of 2023, compared to 3,390 over the same time span in 2022. Total sales historically peak in June in Boston’s real estate market. Boston recorded 607 total real estate sales last month in June, which was the lowest total for June in the past 5 years, even lower than the 610 total sales recorded in 2020 during the height of COVID.
Despite the significant drop in total sales, Boston’s 30 day median sale price remains high. Last month’s median sale price for all residential property types hit $827K, up slightly (+2.09%) from a year ago.
This can be attributed to the drop in total listings from 1,629 in June 2022 to 1,327 in June 2023, a -18.54% decrease in total real estate inventory. So while high interest rates have taken a toll on real estate demand, the lack of real estate listings has kept home prices from tumbling.
Single Family Home Sales Down in Boston
Demand for single family homes has dropped more than any other property type in Boston. There were 86 single family home sales in Boston last month, down from 137 in June 2022. Total listings for single family properties dropped are down -38.83% over the same time span showing that both supply and demand for single family homes have cratered since a year ago.
Due to the shortage of properties, median sale prices for single family homes are actually up +3.35% year-over-year despite the drop in demand. Price per square foot for single family homes was $556 in June, a +4.12% increase year-over-year.
Reduced Demand For Boston Condos
The demand for Boston condos has also taken a hit thus far in 2023. Total condo sales were down 29.35% last quarter compared to Q2 2022. The 450 condo sales recorded last month in June is down from 576 in June 2022.
Despite the drop in demand, condo prices remain close to their level from a year ago. Median sale price for condos are +1.27% compared to June 2022 while price per square foot ($867) is down slightly at -1.70%.
Boston Real Estate Market 2023 Q3 Forecast
If historical trends prevail, we’ve already passed the height of seasonal real estate demand in Boston’s housing market. Total sales and median prices typically peak in June and begin to come back down to Earth in the late summer months. Boston will likely see a 20-30% drop in overall real estate sales in 2023, which in any normal market would translate to price reductions. That may not be the case in Boston.
The Fed did not raise interest rates in June despite inflation remaining above target levels. The Federal Open Market Committee announced that they are still penciling two more rate hikes for 2023, which will further erode real estate demand as we head towards the slow season.
However, the overall shortage of housing inventory is still propping prices up in Boston. Boston saw the lowest number of new housing units in the past 7 years in 2022. So far in 2023, residential building permits approved by the BPDA are down, which does not bode well for the short supply of Boston real estate. Unless the city and state can help streamline, optimize and incentivize the process of the getting vastly more new projects approved, don’t expect prices to come down by any significant amount in the near term future. We will continue to monitor these trends as they develop.
Demetrios Salpoglou
Published July 18, 2023
Demetrios has pulled together the largest apartment leasing team in the Greater Boston Area and is responsible for procuring more apartment rentals than anyone in New England – with over 130k people finding their housing through his services. Demetrios is an avid real estate developer, peak performance trainer, educator, guest lecturer and motivational speaker.
