Summer 2022 – Real Estate Market Overview

The beginning of summer, increases in interest rates, and higher cost of living have brought new market conditions to Boston real estate.

Properties are selling on a consistent basis, but we are seeing lower open house visits, less private showing activity as well as fewer offers on each property.

A combination of factors have created these conditions; higher interest rates on mortgages being a main reason. Even though historically rates around 5% are still low, many buyers can afford less with a rate jump from 3% to about 5% in recent months. Secondly, we had some beautiful weather and long weekends, so many people took a break from their search to enjoy time with family and friends.

Thirdly, inflation is affecting monthly spending and budgeting. With gas prices rising near $5 per gallon, many people going back to the office and food prices being up, the general cost of living is increasing while current salaries are not following these trends.

Lastly, buyers are simply tired from the years of a highly competitive market and losing on bidding wars. Likely, many buyers had to renew their leases for next year and stop their search.

In my professional opinion, the new reality will not stop or sink our real estate market. Mostly because the demand for housing in Metro Boston and Eastern Massachusetts is still high and our local economy is very strong. The mix of different industries from medical, education, biotech/life sciences, and startup companies provides enough buying power for purchases to continue. We also see rising rents that will continue to push people towards home ownership – particularly as the market gets less competitive.

Finally, pricing will stay flat for the remainder of the year if the mortgage rates remain around 5%. However, this is also very property and location specific. For example, the high demand for single family homes in Cambridge, Arlington, and Somerville will continue to raise prices. Whereas Boston condos, particularly ones in luxury buildings may see flattening and potential decrease in pricing.

There is more to this story, if you have any questions, please don’t hesitate to contact me at your convenience