Boston Market Update First Half 2014

Predicting the future can be risky. Back in January I summed up the 2013 market and made some predictions for 2014. Now that the first half numbers are in, let's see how I did...
My predictions back in January were

  • Continuation of record low inventory
  • Buyer demand to remain very strong
  • Prices likely to keep rising due to low inventory

Based on those trends I advised that:

  • Waiting to buy is not a good strategy as prices will climb
  • Waiting to sell is not a good strategy if you are looking to trade up since
    although your house may sell for more, you will pay even more for the
    next one.            

Let's check the numbers to see how first half of 2014 compares to the same period in 2013*

Metric First Half 2013 First Half 2014 Change % Change
# Sales 2145 1891 -254 -12%
Average Price $830,145 $965,593 $135,448 16%
Median Price $579,000 $675,000 $96,000 16.5%
Days On Market 50 51 1 flat
Total Market $1,780,661,685 $1,825,935,441 $45,273,756 2.5%

Despite a 12% drop in # of sales (due to low inventory), compared to the same period last year

  • Prices  are UP 16%
  • Things continue to sell at 2013's rapid pace
  • Overall market is up $45M with 12% FEWER sales

In other words, if you bought the "average" home in Boston in 2013, it would have cost
you $830K. Today it would cost you $135,000 more.  And remember 2013 prices were 10% higher than 2012's! Can you say red hot market?         

This is not unique to Back Bay, Beacon Hill, etc. Dorchester, traditionally one of Boston's lower price point markets, also saw 14% prices rise even in the face of a 24% increase in sales, sending the total market volume up an astounding 42%!

Metric Q1 & Q2 2013 Q1 & Q2 2014 Change % Change
# Sales 274 340 66 24%
Average Price $329,734 $376,568 $46,834 14%
Median Price $322,500 $360,000 $37,500 12%
Days On Market 73 64 -9 -12%
Total Market $90,346,991 $128,033,255 $37,686,264 42%
 

No matter how you look at it, prices are up approximately 15% year over year in nearly every corner of the city compared to 2013. And lest we forget, 2013 was up 10$ over 2012 so this is a mult-year trend.

What about the rest of 2014?

While I get to do the "I todl you so" dance for my first half predictions, there are some early hints that things may be easing off. Flawless properties in high demand locations are still selling in days at record prices. But slightly lesser but still excellent properties are moving more slowly compared to a few months ago. Buyers are exhausted from lengthy searches and bruising bidding battles. And with prices up 10% last year and 15% so far this year, affordability is being stretched to the breaking point in many neighborhoods, even with low interest rates.
With this is mind, I'm adjusting my predictions somewhat for the 2nd half
  • Inventory will remain tight but as the speed of sales slows a bit, may
    start to finally inch up
     
  • Buyer demand will remain strong due to low rates and robust Boston
    economy but the days of 20-way bidding battles may be behind us
     
  • Prices will remain strong but we may be finally hitting some price
    resistance. We could see some moderation in the rate of increase as we move into fall.
     
  • Surrounding neighborhoods will continue to enjoy the "halo effect" from
    record prices downtown, as buyers continue to seek more affordable
    options, but I expect those price increases to slow.

If you are a potential buyer, Fall may be one of the best times we've seen lately to find
a home.   We are seeing a glimmer of hope in rising inventory and the beginnings of price
rise moderation. Rates are still amazing but that won't last forever.  If interest rates rise, not
only will your mortgage payment cost you more, you may qualify for less purchasing power
and be forced to buy a lesser home.

If you are a potential seller, this may be the best time to sell!  We know the market we
have now and it's still amazing for sellers. The future is less predictable and if rates rise, it
could slow the market down.  And with inventory just starting to creep up, you are likely to
have an easier time finding your next home.

Whether you are buying, selling, trading up, or moving out, I'm here to help!  Call or email
me so we can make the best plan for you to move forward in the current market.

Finally, remember the numbers in this report cover many neighborhoods - yours may be
different than shown here. I'm happy to let you know what's going on in your specific
neighborhood, as well as your specific house - just ask me!

I hope you found this report useful and look forward to hearing from you.