The New “New Normal” in Greater Boston Real Estate

Hello Clients and Friends!

The fall season is well underway and along with the weather, the Boston area’s real estate market has begun to cool down. As the Federal Reserve continues to maintain and raise high interest rates in hopes of curbing inflation, the number of mortgage applications will continue to decrease and the housing market will slow. 

When rates are high, lenders supply fewer loans and fewer borrowers tend to get approved. For perspective, in 2020 mortgage rates were 2.7% while today’s is around 7%. During a typical cyclical year, the real estate market tends to slow during the fall and winter months. With the current high interest rates along with the typical seasonal slowdown, Fall 2022 has proved to be no exception. Across the broader Middlesex County, we are seeing longer listing periods, a decrease in new listings, and slower turnover. Continue reading to learn the specifics of the fall market trends, broken down by property type. 

Condos

The number of condos sold in October 2022 was 370, an 11.90% drop from September’s 420 listings sold, and 30.97% lower than the 536 listings sold in October 2021. The absorption rate is sitting at .54 and has shown a downward month-by-month trend from the rate of 1 at the start of February 2022. The average number of days on the market spiked to 26 days in September and dropped back to 20 in October. Compared to the prior year, we are experiencing the shortest fall listing periods for condos in the past two years. Consistent with the trends seen during the past two fall seasons, the number of new listings peaked in September at 720 listings and significantly dropped to 484 listings in October. The high inventory levels have persisted into the fall slightly decreasing in October to 690 from the September high of 713 active listings. Consistent with the broader Boston market, property values have risen from the September lows to an average sales price per square foot of $492, up 9.58% from $449 in September, and have presented a consistent year-by-year increase since October 2020.

Multi-Family

The number of multi-family units sold in October 2022 was 99, a 25% drop from September’s 132 listings sold, the lowest level in comparison to the multi-family units sold in both fall 2020 and 2021. The absorption rate is sitting at .47 and has shown a consistent downward month-by-month trend from the rate of over 1 in March 2022. The average number of days on the market spiked to 29 days in September, the longest listing period throughout the last two fall seasons. The number of new listings has remained generally consistent since the fall of 2020, with the lowest number of new listings occurring in October 2022 at 125 listings. The number of properties for sale has maintained an upward trend since the fall of 2021 with inventory peaking in September 2022 at 248 listings, and dropping to 210 listings in October 2022. On average, property values have only slightly increased since 2020. The average sales price per square foot is currently $352, a 3.23% from September 2022 and a 1.40% drop from October 2021. 

Single-Family

The number of single-family units sold in October 2022 was 729, an 18.18% drop from September’s 933 listings sold, and the lowest level in comparison to the single-family units sold in both fall 2020 and 2021. The absorption rate is sitting at .7 and has shown a consistent downward annual trend since the fall of 2020. The average number of days on the market peaked at 23 days in October, the longest listing period for the last two fall seasons. The number of new listings in fall 2022 has decreased year-by-year since fall 2020 with the lowest number of new listings occurring in October 2022 at 846 listings. Based on the trends from the prior years, we can expect the number of new listings to continue to fall in November and December 2022. The inventory available reached a two-year high in September at 1,209 listings and dropped 14.31% to 1,039 in October. Despite the numbers presented above, property values have risen to their highest fall levels. The average sales price per square foot increased to $383 in October, an 8.81% increase from October 2021.

Best regards,

– Boris