The Boston real estate market has been booming over the past year. In June, the median home price hit a record high of $ 900,000, an 11% increase from June 2021, according to the Greater Boston Real Estate Board (GBREB).
Boston luxury home prices have risen at an even faster pace, fueled by a wave of high-end condominium developments. The average price reached $ 2.2 million in June, up 16.1% from the previous year and nearly 30% from June 2020, according to real estate agency Redfin.
But just like other midsize U.S. cities ranging from Austin to Portland, Oregon, whose popularity had soared in the aftermath of Covid-era restrictions as people reassessed their housing needs, they began to appear. signs of market decline. Rising mortgage rates, inflation fears and a volatile stock market are starting to put a strain on Boston’s buying madness.
The number of single-family homes sold in Boston in July 2022 fell 18.6% year-on-year, to the lowest volume in more than a decade, while condo sales fell 25% over the same period. Pending sales also fell 10% this summer, despite nearly 20% more active listings, reports the GBREB.
While these declines are certainly not America’s steepest – Florida’s key markets are faring much worse – fears of a bubble have begun to emerge.
“Boston isn’t unique in that many US markets are now considered ‘overvalued’,” says Selma Hepp, deputy chief economist at real estate analyst CoreLogic. Boston home growth rates have dropped to 10% annually from 13 to 14% annually, according to Hepp, who says he expects this number to reach 6% by the end of 2022 and potentially half by 2023.
The enthusiasm among some buyers remains. Across the city, a number of ultra-luxury condominium projects – in branded hotel developments from the likes of Four Seasons, St Regis and Raffles – continue to attract UHNW buyers (both local and foreign) as well as pushing towards the high -market prices. Raffles’ average unit, for example, is $ 3.8 million, nearly double the average numbers at the top of Boston’s luxury market.
At the same time, once less favorable areas like Dorchester – and non-central districts like Somerville – are attracting Bostonian veterans eager for larger spaces at lower prices.
Take Casey, who, along with her husband Joey (they didn’t want to reveal their last names), recently purchased a 1,900-square-foot, three-bedroom condo in the increasingly desirable Savin Hill area of Dorchester for just over $ 900,000. The couple – who were renting in much more expensive Cambridge – exemplify the current Boston shopper group: Casey works in healthcare, Joey in finance, and both have sizable salaries and hybrid home-office work arrangements.
“We looked across town but managed to get three bedrooms instead of two in our price range in Dorchester,” says Casey. “The area also has a nice gay population and is within walking distance of a beach.”
Coldwell Banker real estate agent Greg Dekermenjian says Casey is typical of new buyers in Dorchester, a traditionally African American district that’s actually Boston’s largest neighborhood.
“Dorchester’s prices are $ 500- $ 700 per square foot,” he says, which is less than half the cost of historically exclusive areas such as Back Bay or South End. plans “found throughout Massachusetts that Casey and Joey have purchased.
The three floors also form the centerpiece of an innovative East Boston housing scheme. East Boston Community Development Corporation will purchase 36 mostly three-story buildings containing 114 rental homes to keep them affordable. A neighborhood group trust would operate the development. The project, which is expected to be finalized later this month, is the first of its kind east of the Mississippi River.
Despite those historic homes, Dorchester, like the rest of Boston, has experienced a surge in large-scale development types whose new-build, high-end housing is helping to inflate average selling prices across the city. Dorchester’s most notable development is a 1.56 million square foot project with nearly 600 homes spread across three residential buildings along with retail space, a park, plaza and four laboratory buildings (the latter a response to the industry ever-expanding biotech in Boston).
Still in the planning stage, the project, if completed, will form a triangle with two further equally grandiose redevelopment projects including Southline Boston, which will inhabit the former headquarters of the Boston Globe newspaper.
Across town, WS Development’s impressive Boston Seaport is a 33-acre mixed development near the Financial District with flagship tenants including Amazon – which will soon take up more than 1 million square feet of retail space – along with rental and sales towers with nearly 2,200 total units. Among them will be the upcoming St Regis, where prices start at just over $ 2 million for a one-bedroom apartment.
Those numbers, says Dekermenjian, don’t reflect Boston as a whole, where pockets of convenience can still be found. For example, Megan, who did not wish to reveal her last name, moved with her husband and two children to a renovated three-bedroom house in Somerville two summers ago, which they bought for $ 1.5 million, right at the bottom. to the street from their previous home.
“This was our budget and we thought we’d have to settle for a suburb as far away as Belmont, Arlington or Lexington,” he says. “We still can’t believe that not only could we stay in Somerville, but that our children can still walk to school.”
The Boston area is home to Harvard, MIT, and Boston University. Each year, approximately 150,000 students descend on the city, with their parents making up a key component of the Boston real estate market.
The city’s population grew by almost 10% between 2010 and 2020, reaching just under 700,000 inhabitants.
What you can buy for. . .
$ 935,000 A two bedroom duplex penthouse in Dorchester (Coldwell Banker).
$ 1.399 million A two bedroom, two bathroom, 1,285 square foot condo in a converted 1890s red brick town house between South End and Back Bay with high ceilings, hardwood floors, and outdoor terrace (Coldwell Banker).
$ 17 million A six bedroom home in Back Bay designed by Louis Comfort Tiffany (Christie’s International Real Estate).
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