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Columbus & Over Group Update 07/21/22

Boston Luxury Housing Market: Mid Year Market Report

As we pass the midpoint of another year, the questions around market dynamics seem as pressing as ever. The momentum across markets points toward an economic recession while housing markets nationally have begun to see changes, some might call them “corrections,” taking hold. Here in Boston, the demand side has continued to transcend the impact of rising rates and eroding economic conditions keeping housing prices stable so far in 2022. At least for the last 20 years, Boston housing prices have, more or less, withstood the strongest economic headwinds that we’ve had to face!

Boston housing market: post-covid

Following two full years of Covid and quarantine fever (no pun explicitly intended), we expected the city real estate market to surge in the spring of 2022. Boy did it! Starting early in the seasonal timeline that we follow so closely, we saw city real estate prices rocketing up from some of the pandemic level discounts that had been rather broadly available to intrepid buyers in mid to late 2020. You’ll see in the charts below both the transaction count and pricing growth in 2022 has been robust across the three core neighborhoods of Boston.

Federal Funds & Interest rates 

More recently, conditions have shifted rather aggressively in the equity and bond markets and, even if it’s not fully jarring our housing market yet, those moves are bound to have ripple down effects across our sector as well. The May and June meetings of the Federal Reserve certainly added fuel to the fire of the economic hawks. The Federal Funds Rate target has increased from 0.0-0.25% in January 2022 all the way to 1.5-1.75% as of the most recent meeting in June. Threats of continued rate increases through 2022 are rampant. This is all intended to ease and reduce inflation back to the more modest 2% target that the Fed views as reasonable.

What does this mean for Boston Real Estate in 2022?

We think the city housing market is facing some tricky times over the balance of this year. Higher interest rates accompanied by increasing inventory will have buyers feeling less motivated (concern over increased monthly payments and/or the more “emotional” fear of overpaying). Meanwhile, sellers may wonder why their property won’t trade like their neighbors did (quickly and resoundingly) in the spring of 2022. As city residents think about buying or selling in the second half of 2022, it’s important to be as strategic as ever to avoid the traps of an evolving and transitioning market. 

 

Let Columbus & Over Group get to work on your behalf with our team of professionals who treat each client as a friend while maintaining the professional service relationship and integrity that you would expect from your most trusted advisor. We customize our approach and services to every single client and evolve with clients (and markets) as they move.

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