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What direction is the housing market taking in Boston?

Posted on June 2nd, 2016

The Boston real estate market could be the busiest it’s been in years this spring. Home buyers are coming out in droves and there’s plenty of sales to report. The way prices are heading in the Massachusetts real estate market is another story. There may be signs that the incredible home growth is actually slowing down.

One of the key measures for market activity is pending sales. This traces the homes where buyers have signed a sales and purchase agreement, but nothing has closed officially yet. It can take a couple of months for this process to complete. Home prices and condo prices dropped in price for the first time in a year as pending sales skyrocketed which was indicated in a report by the Massachusetts Association of Realtors. Buying a house in Boston is quite expensive says chief economist at Zillow, Svenja Gudell. If there are small increases in price, this is going to deter some buyers.

Understanding the Numbers

• In the pending sales category, the median price of a home fell 2.3 percent to $308,750 in February and condos dropped to 285,000 or 2.3 percent
• In February homes sales jumped 75 percent when compared to last year when a large snowfall deterred home buyers
• The numbers went from 2,578, to 4,521 which is the most pending sales for the month of February since 2004. The pending sales for condos were up 61 percent
• In 2015 there was a 6 percent increase. For now, Zillow’s Gudell is lowering the Boston housing price projections for 2016. In the second half of the year, prices will slow to a significant degree.

Gudell forecasts that the home values in the Boston area will edge up by about 1.5 percent for the year. In some of the exclusive suburbs like Concord, Weston, Lincoln, Greater Boston, Lexington, Cohasset, and Sherborn, home prices fell. In Wellesley, Winchester, and Belmont, Banker & Tradesman publisher, The Warren Group said they stalled out.

What Does it Mean?

Some are skeptical and think that Boston real estate prices will keep rising as there’s a shortage of condos and homes that are for sale in the Boston area. Residential construction hasn’t bene keeping pace with housing demand. In January of this year there was a 20 percent decline compared to the start of 2015. Areas such as Somerville, downtown Boston, and Cambridge are unlikely to see any housing price declines.

Through the spring prices are likely to go up and that may continue throughout the rest of the year according to One Boston/Raveis Marketing Group. Supply and demand will fuel the housing prices in 2016 for Boston and the surrounding area.