Area’s typical home price reaches $900,000
Jump sets a record for March, condo prices also up as supply, interest rates still factors
Median home price in Greater Boston was up 9% over March 2023
Bad news, homebuyers. Home prices around here aren’t going anywhere but up.
The median price of a single-family home in Greater Boston shot up in March to $900,000, according to figures released Tuesday by the Greater Boston Association of Realtors. That’s an increase of more than 9 percent over the same month last year and a new March record.
It’s an eye-popping number that does not bode well for housing affordability this year. March typically falls near the beginning of the housing market’s spring upswing and $900,000 is just short of the region’s record monthly high of $910,000, reached last July at the peak of home-buying season. That prices are already closing in on that number means the region may be in for another summer of record-breaking home prices.
Two main factors are driving the surge in prices. The first is the region’s massive housing supply shortage, which leaves a large number of potential buyers competing for relatively few available homes, causing bidding wars. The other is stubbornly high interest rates. Mortgage rates are still much higher than they were for more than a decade up until two years ago. That makes monthly housing costs more expensive, a dynamic that has driven many wouldbe sellers from the market, constricting the region’s housing supply even more.
“We lack listings, and that’s putting upward pressure on prices and creating affordability issues, especially in the entry-level market,” said association president Jared Wilk, a broker with Compass in Wellesley. “It’s the primary reason sales activity isn’t stronger right now. We need more properties to sell.”
Condominium pricing doesn’t look much better for buyers. The median-priced condo in the association’s coverage area, which covers most of Greater Boston except for the North and South Shores, sold for $740,000, up nearly 9 percent from March 2023, when that figure was
$680,000.
The Greater Boston housing market has been practically frozen for the last two years, with higher interest rates driving both buyers and sellers out of the market. There have been some small signs that things may be starting to loosen up, but that largely depends on mortgage rates, which have been up and down, but mostly just up.
The average rate on a 30-year fixed-rate mortgage was 6.88 percent last week, according to Freddie Mac, still more than double the rate two years ago.
As such, home sales are still dropping. Last month, just 606 single-family homes sold in the region, according to the realtor association, down roughly 3 percent from the 630 sold in the same month last year and the lowest number of sales recorded in the month of March in the last 15 years. Listings fell too. Just 1,002 homes were listed for sale in Greater Boston last month, a more than 20 percent drop from the 1,303 homes on the market in March 2023.
Some buyers can’t stomach both the region’s sky-high home prices and a high monthly payment. And many property owners don’t want to sell right now, because they don’t want to give up their relatively low mortgage rates for a much higher rate on a new place.
“Inventory remains limited in many communities, which is giving sellers the ability to be more aggressive in their pricing,” said Wilk. “On top of that, buyers are having to contend with multiple offer situations again and many are opting to bid above the list price in an effort to buy a home, and all of this is fueling the steady appreciation in home prices.”
Still, the dynamic has been dragging on for so long now that some realtors think something has to give soon. First-time homebuyers are still desperate for a home, and can only wait so long. Sellers are getting impatient too.
“There’s a greater sense of optimism about the housing market today than any time in the past two years,” said Wilk. “Buyers are enthusiastic, and fewer are waiting for mortgage rates or prices to drop to move forward. Sellers also appear to be more accepting of the current interest rate environment, and many seem to be looking at the next few months as an ideal time to maximize the equity in their homes. That should make for a healthier housing market this spring.”