It’s been a difficult couple of years for those looking for affordable real estate in Boston. According to the Massachusetts Association of Realtors, the median home value citywide increased 12% in 2016 and a staggering 47% in the last five years. Though there has been a slight and likely temporary drop in prices for real estate in Back Bay and condos in The South End, which fell in median value by 33% and 55% respectively in 2016, most Boston neighborhoods are seeing consistent double digit increases year over year. And according to a new report from Standard & Poors, the Boston real estate market will continue the upward trend over the next several years, with an estimated 24% jump in home value by 2020. This estimate is dependent on some unpredictable variables like the performance of the economy, but the report also indicates that if another recession like the economic downturn of 2007 were to hit, home prices in the Boston area would fall by less than 2%, while the rest of the nation would see a 27% plunge.
What does this mean for Boston real estate and buyers looking for homes for sale in Back Bay and other Boston neighborhoods? Because Boston is one of the three or four lowest-risk markets in the country due to a broad scope of industries, an abundance of universities and medical institutions and an exceptional employment market, buyers should be assured that purchasing a home in Boston will likely remain a sound financial investment. But with an increase in prices and mortgage rates on the horizon, those looking for real estate investments that are likely to yield significant return should consider buying sooner rather than later. They should also work with an agent who understands how real estate in Boston neighborhoods has changed over the last 10 years, and has done significant research on which Boston neighborhoods are likely to grow the most in the next 5 years. For example, a savvy real estate agent should know that real estate in Somerville has increased 48% in the last 5 years, but the median home value fell by 1% in 2016, indicating a major shift that affects it’s desirability from an investment perspective. Other neighborhoods with similar proximity to the city - East Boston, Dorchester and South Boston for example, saw a very healthy increase in 2016 that, coupled with a flood of new residential and commercial development projects, make them likely to have significant increases in both short and long-term home values.
The Boston real estate market is undoubtedly one of the most desirable in the nation - and for good reason. The lifestyle is great for it’s residents and the city is able to withstand economic hardships much better than most other markets. But desirability and affordability are inversely proportional, and if the aforementioned S&P report holds true, the longer buyers wait, the less return they are likely to see on their investment. Regardless of timing, it’s critical for buyers to be well-informed about not only the Boston real estate market, but the factors that contribute to growth within the city’s different neighborhoods. When it comes to condos for sale in Back Bay and real estate for sale in Charlestown, a savvy buyer must consider many things beyond the differences in characteristics of each neighborhood. The Boston housing market will only become more complex for buyers as home values increase. Working with an agent that has deep expertise in Boston real estate and a well-researched perspective on it’s future is the best way for a buyer to make satisfying and fiscally smart choices.
The Charles Realty has had its finger on the pulse of Boston real estate for 34 years. Our agents have unparalleled knowledge of the city and it’s neighborhoods, and oftentimes have access to information not yet made public. For any questions about listings in the aforementioned buildings, other new projects in Boston, the status of projects, availability of new construction homes, or anything pertaining to Boston real estate, please contact us.