2024 Q1 Boston Real Estate Market Report

2024 Q1 Boston Real Estate Market Report

The Boston real estate market started 2024 on a slow note. Total real estate sales in Boston decreased -10.62% compared to 2023 and -33.75% compared to 2022 due to rising interest rates. Given the low housing inventory, average sales prices for all property types rose +9.81% year-on-year in March and show little sign of a decline. Here are the trends impacting the Boston real estate sales market.

Home sales in Boston continue to decline

The city of Boston recorded a total of 850 residential real estate transactions through the first quarter of 2024. Compared to 951 sales in Q1 2023 and 1,283 in Q1 2022, we see a sharp decline in total real estate transactions directly related to the Fed’s recent rate hikes. Numerous speakers and experts predict that interest rates will fall in late summer and fall 2024. After all, it’s an election year and we keep hearing the word “recession” even if we don’t see it. Big job losses in Boston – yet. Clearly there is pent-up demand for people looking to move, but no one wants to miss out on the incredibly low interest rates they currently enjoy. If interest rates fall by two or three points, this should lead to more inventory and corresponding demand. For now, it’s just a waiting game with frozen and stalled marketplaces across nearly every real estate sector. Transaction numbers in 2024 are expected to be below what we have seen in the Boston real estate market over the past five years, barring dramatic changes.

Boston’s real estate inventory continues to decline

Boston ended the month with a total of 1,162 home listings for sale. This is a 4.2% decrease from the inventory of 1,213 in March 2023. With the exception of March 2020, which was marked by COVID, inventories have been slowly declining year-over-year since 2019. This is due to the city’s inability to produce new construction stock to keep up with Boston’s increasing demand. When supply becomes tight, prices naturally rise, and that’s exactly what we’re seeing in the Boston real estate market over the same time period. Nothing can escape the invisible hand of supply and demand. No one can escape the fundamental truth of supply and demand. We need to think differently and make it much easier for free market forces to produce more supply in a much shorter period of time. All new development approaches and ideas must be given a chance to be implemented. Until we aggressively address the supply issue; Our demand problem will keep prices higher.

Boston median sales price near all-time high

The median sales price for all property types in Boston last month was $871,267. This represents a +9.54% increase in the average sales price compared to March 2023 and is just below the all-time high 30-day average sales price of $876,091 in Boston in April 2022. Considering the high demand season Still ahead of us in 2024, it is possible that this record will be broken in Boston in the next few months. However; Interest rates have been rising recently and this may dampen future price increases. It’s going to be an interesting spring and summer.

Interestingly, the price per square foot for real estate in Boston has remained mostly consistent over the past two years. Last month’s price per square foot of $757 is up +4.85% year over year and has fluctuated between $700 and $800 for most of the past 24 months.

Boston Q2 2024 Real Estate Sales Market Forecast

Looking ahead to the second quarter of 2024, it is expected that total property sales will continue to lag behind previous years’ figures. April through June are historically the busiest quarters of the year for the Boston real estate market, and that will likely continue this year, albeit with lower numbers than in past years.

As housing inventory remains low, expect home prices to remain high, although they may stall in the next few months as interest rates threaten to rise. As soon as the market closes at the end of the 3rd/4th. Once the quarter reaches its annual decline, prices are likely to level off. There is always a real possibility that a recession could occur and this could lead to a drop in interest rates, which could change the equation. To move the needle significantly, we would probably need a cut in interest rates of at least 3% to unfreeze the market. We believe that the average sales price will reach an all-time high next quarter and potentially break $900,000 for the first time in history if we continue to limp along in our current stalled real estate dilemma. It’s a pretty tough year to make big predictions as we face an upcoming national election that can often add additional chaos to the business equation.

To truly counter rising property prices, we need to bring new inventory onto the market to offset the high demand for property. The City of Boston needs to get to work greenlighting new construction projects and making it easier for developers to continue building in Boston. Developers should be more vocal in calling on the government to reduce or temporarily remove affordability requirements on all eligible deals. Due to the high cost of labor, credit and materials, it is currently almost impossible for developers to make a profit. Capital and talent are shifting to more business-friendly environments, and our elected officials should better understand current market conditions and create incentives to boost supply in the Greater Boston area.

We will continue to monitor the Boston real estate sales market as these trends develop.