Home News Greater Boston’s housing market is cooling, but don’t think it’s going to get any easier to buy a house

Greater Boston’s housing market is cooling, but don’t think it’s going to get any easier to buy a house

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Even with house prices starting to trickle down, Swampscott, where they now live in the three-bedroom, still has very little.

“In a healthy housing market, you should be able to find another home, right?” said Berdofe, who wants to stay in Swampscott because his two young children have friends in the neighborhood. rice field. “There are myriad reasons why that’s not the case for us right now. Both options feel like the wrong choice, so I don’t know whether to wait for this one or continue.”

Indeed, after a frenzy The Greater Boston housing market is slowing due to rising demand and prices during the pandemic. This means homebuyers have a little more power for the first time in a long time. Homes stay on the market longer and sell for a little less.

But the same dynamics that started to change the market – rising mortgage rates, inflation and severe supply shortages – have pushed housing even further out of reach for many, making it affordable. Some of the indicators in the GDP have reached their lowest points in over 30 years.

Aaron Berdorf in the completed basement. Swamp Scott’s house is used as a storage room for his family of four. Boston Globe’s Josh Reynolds

“We have quite a few buyers raising their hands to find out how much it will cost to buy a home in Greater Boston and how much they will pay for their monthly mortgage,” says Dawn Ruffini. She is president of the Massachusetts Real Estate Association. “In many cases, if people don’t need to buy a house now, they won’t buy it.”

Boston has long been a tough market for buyers, and suddenly it’s a tough market for sellers as well.

After years of watching our neighbors let us set prices, today’s prospective sellers are facing declining demand. Many people are probably paying lower interest rates on their next home purchase. As such, some are reconsidering whether now is really the time to sell.

“It’s almost a stalemate,” said Adam Glenn, an associate professor of economics at Boston University. “There’s a flood of buyers, but not a flood of sellers. That was months ago. It creates a market overall where things are just slow.”

Much of the rapid change in the market has been driven by mortgage rates, which on Thursday more than doubled from a year ago to an average of 6.29%, the highest since 2008. It could then gradually penetrate the mortgage market and drive up borrowing costs in the foreseeable future.

That’s stifling demand, pushing the once-booming housing market across the country to the brink of decline.

Nationwide home sales fell for the seventh straight month, according to the National Association of Realtors.Some economists predict double-digit percentages prices will fall in the next few years Probably around 15-20% in a market where housing is heavily overvalued and demand is falling.

“Everything that goes up has to come down,” said Chris Delitis, deputy chief economist at Moody’s Analytics. “We had a lot of demand — it felt like people were willing to give newborns to secure an offer — which was pushing up house prices. It’s really pushing that demand down and we’ll see these prices fall accordingly.”

Last week, Moody’s estimated that housing in Greater Boston was “overvalued” by about 20%, just below the national average. This will portend prices he said to fall 5-10% by early 2024, deRitis said.

After peaking in June, prices have continued to fall over the past two months, as is typical at this time of year, with the Greater Boston Association of Realtors reporting a median single-family home price of $825,000 in August. doing. This is down 1.8% from July, but still 6% higher than the same month last year.

Chestnut Hill-based William Raves real estate agent Mary Gilak said she’s seen firsthand the decline in demand in the Boston area. Earlier this month, she held her first open house behind closed doors since markets surged during the pandemic.

“It’s hard to predict,” Gillach said.

Still, Boston’s housing market has been as booming and busting as many other places for as long, and some experts believe the price drop will be marginal at worst.

What’s the big reason? Shortage of housing in the area. With little supply in the market and sparse new construction, there is only room for prices to fall. Not to mention the fact that many developers are delaying new projects because construction costs are so high.

Last month, a construction worker looked out the window of a building near Boston’s Battery March and High Street. David L. Ryan/Glovestaff

“The concern here is that there is very little supply entering the market,” said BU economist Guren. “This will keep house prices relatively high.”

This is bad news for everyone involved, but especially bad news for buyers. They still face high list prices and tough monthly payments. Scars can last for years.

And that puts people like Beldoffe and his wife in trouble. Berdofe estimates that if you have to pay a 6% mortgage rate, not only will your new home cost more, but your monthly mortgage payment will roughly double. Many new buyers carry it. Still, given the upward trajectory of Boston’s housing market over the past decade, we’re not optimistic that things will get easier anytime soon.

“The whole situation is a mess,” said Berdofe. “I don’t want to pay more, but I know that the longer I wait, the more I will pay in the long run.”

To contact Andrew Brinker: [email protected]Follow him on Twitter. @Andrewn Brinker.

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