Real Estate News

Home prices in Massachusetts break records again

Sales plummet, and experts say, 'Prospective buyers will be hard-pressed to find an easy route to homeownership.'

By Eileen McEleney Woods - Globe Staff

August 15, 2023

• Facebook
• Twitter
• Email
• Email
• 4

Home prices continued their ascent in July. The increase in costs may not be as meteoric as we seen over the past few years, but the housing market is showing no signs of burning out.

The Warren Group, a real estate analytics firm, released its monthly market wrap-up this morning, and the tune — a real toe-tapper for sellers but nails on the chalkboard for buyers — feels as if it’s been on repeat: Home prices are breaking records. Mortgage rates are up. Sales are down.

The median sales price of a condo in Massachusetts rose 6.5% year over year in July to $555,000, but sales were down 14.3%.

In the state’s single-family home market, sales were down nearly 25%, but the median purchase price rose 4.3% to $610,000.

Compare this with the numbers from June — when Cassidy Norton, associate publisher and media relations director of The Warren Group, said, “Single-family homes in Massachusetts have never been less affordable.”

July heard this and said, “Hold my beer.”

The condo market commanded a record-breaking median price in June, but the year-over-year increase was only 1.9%. The single-family home market also broke price records that month, but the year-over-year increase in the median cost back then was 1%.

“Once again, median single-family home prices continued to set records across Massachusetts despite mortgage interest rates that are nearly double what they were this time last year,” Norton said of the July market. “Demand is obviously still strong among prospective buyers, but inventory can’t keep up.”

The condo market always seems to parrot what the single-family market is doing.

“Condo prices and sales activity followed similar trends to single-family homes in July,” Norton said. “Sales were down while the median price continued to set records. Historically, condos have been a more affordable alternative to single-family homes, but with the median price hovering above $500,000 for the last three months, prospective buyers will be hard-pressed to find an easy route to
homeownership.”

Mortgage rates flirting with 7% have sellers reluctant to list.

“While we generally see a hot real estate market in the summer, inventory continues to hold it back from achieving any year-over-year growth,” Theresa Hatton, CEO of the Massachusetts Association of Realtors said in an Aug. 11 news release. “With the competitive buying market, we are seeing many potential sellers are refraining from listing their homes due to the attractive existing mortgage rates they have combined with the stress of entering the buyers’ market after their current home sells.”

The drop in purchasing power can make even the most bold buyer squeamish to enter the fray.

“We haven’t experienced a buying season this sluggish, with sales so hard to come by, since we were emerging from the Great Recession,” Alison Socha, president of the Greater Boston Association of Realtors and an agent with Leading Edge Real Estate in Melrose, said in a news release Monday. “This year has been especially frustrating for prospective buyers because inventory levels have been so limited. And to make matters worse, purchasing power has declined since the spring due to higher mortgage rates which has further reduced the opportunities to buy and diminished the overall buyer pool, creating weaker demand in recent months.”.

Here is what the market is doing in your county:

Condos

Single-family homes

In the town-by-town sales breakdown, purchases of single-family homes in Cambridge were down nearly 29%, and prices fell 8.1% year over year. In Newton, sales fell 9%, but the median purchase price increased 6.1%.

In the condo market, sales were up 5.7% in Quincy and down about 28% in Brockton, but the cities swapped places on home prices: They climbed 9.3% in Brockton and fell 7.4% in Quincy.

In Boston proper, condos commanded 15.8% more year over year, and sales were up 12.8%. The median price for a condo here was $1,100,000 in July, according to The Warren Group.

A July 19 report from Douglas Elliman Real Estate that focused on the Downtown Boston market in the second quarter indicated big drop-offs in sales prices in Beacon Hill and the Seaport, but jumps in Charlestown and Midtown.

In Greater Boston

Expanding the scope to Greater Boston, The Warren Group reported a 23.2% decrease in single-family home sales and a 15% drop in condo purchases. Prices for condos and single-family homes were up 6.6% and 4.7% year over year, respectively. The median sales price for a single-family home was $775,000, while the cost of condo hit $650,000.

Nationally

Massachusetts wasn’t the only location to see price increases, but the median price for an existing home (not a new-build) in the country was down in the second quarter. The National Association of Realtors offered various insights on the market on Aug. 10, and these were the highlights:

• Single-family existing-home sales prices climbed in approximately 60% of measured metro areas – 128 of 221 – in the second quarter.
• The national median single-family existing-home price declined 2.4% from one year ago to $402,600.
• The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $2,051 – up 11.6% from a year ago.
• One in 20 markets (5%) posted double-digit annual price appreciation (from 7% in the previous quarter).
•  Families typically spent 27% of their income on mortgage payments, up from 24.5% in the previous quarter and 25.3% one year ago.

Some markets that were feeling the crush during the remote-work scramble during COVID are just trying to regain their footing.

“Interestingly, price declines occurred in some of the fastest job-creating markets,” said Lawrence Yun, the national association’s chief economist. “Prices in these areas are trying to land on better fundamentals after several years of skyrocketing increases. In fact, the number of homes receiving multiple offers, alongside continuing job and wage gains, signal price slides may already be a thing of the past.”

Year-over-year prices in the second quarter declined by 19.1% in Austin, 11.3% in San Francisco, 9.6% in Salt Lake City, and 7.4% in Las Vegas.

The top 10 metro areas with the largest year-over-year price increases all recorded gains of at least 10.4%, with six of those markets in the Midwest:

These were the most expensive markets (and percentage change between the second quarter of 2022 to second quarter of 2023):
1. San Jose-Sunnyvale-Santa Clara, Calif. ($1,800,000; -5.3%)
2. San Francisco-Oakland-Hayward, Calif. ($1,335,000; -11.3%)
3. Anaheim-Santa Ana-Irvine, Calif. ($1,250,000; -3.8%)
4. Urban Honolulu, Hawaii ($1,060,700; -7.4%)
5. San Diego-Carlsbad, Calif. ($942,400; -2.4%)
6. Salinas, Calif. ($915,600; 0.6%)
7. Oxnard-Thousand Oaks-Ventura, Calif. ($904,900; -2.7%)
8. San Luis Obispo-Paso Robles, Calif. ($890,900; -3.2%)
9. Boulder ($871,200; -6.7%);
10. Naples-Immokalee-Marco Island, Fla. ($850,000; unchanged).