The precipitous drop in real estate deals in Boston coincides with the Fed’s decision to begin raising interest rates in early 2022. This is the clear culprit of decreased demand in Boston’s real estate market.
Property Prices Remain High But Steady in Boston
Despite the clear trend of demand degradation in Boston, property prices did not decrease alongside demand. Boston’s 30 day media sale price for all property types has hovered around the $800,000 mark steadily over the past 24 months.
Supply of Properties in Boston at a Tipping Point
This can be explained by the very limited supply of Boston real estate for sale. We reported in last year’s real estate market report that new construction units entering the market have significantly slowed under the new administration, a trend that has not changed in 2023. Basic economics will tell you when supply decreases alongside demand, prices will remain steady. That is definitely the case in Boston over the past two years.
As of the beginning of December, the total number of properties for sale in Boston was 1,214, down -10.14% compared to the same time last year. A look at total listings over the past 5 years shows a clear downward trend as the city struggles to keep pace with housing demand.
Trends Affecting Boston’s Real Estate Market In 2024
The biggest trend weighing down the real estate market in Boston is most likely going to be low inventory. Unequivocally, low supply can mostly be pinned on: poor national energy policy, supply chain disruptions, high wages, lack of labor, higher costs of borrowing, arduous permitting delays and high affordability requirements in new developments. All of these combined factors have taken their toll on rising construction costs over the past 24 months. Let’s quickly examine some of the challenges facing us for greater housing supply in Boston.
1. Soaring Construction Costs Preventing New Supply From Hitting The Market
If there’s one thing the…