Oct 22, 2022 - Real Estate

Boston's real estate market is cooling down

Sail boat in Boston Harbor, Boston against the cityscape of Back Bay Boston, Massachusetts, USA from across the Charles River.

Photo: Sergi Reboredo/VW Pics/Universal Images Group via Getty Images

Boston's real estate market is slowing down, according to the latest data from Redfin.

Why it matters: After two-plus years of plummeting inventory and sky-high home prices, Boston buyers can finally get some relief.

What's happening: Homes sales are decreasing, and homes are staying on the market longer.

  • Now buyers have more power to negotiate, Melvin Vieira Jr., president of the Greater Boston Association of Realtors, tells Axios.
  • Buyers are taking more time to do inspections during the home-buying process, Vieira said. That means sellers are going to have to bend.

Yes, but: Mortgage rates are above 6% for 30-year loans, which makes monthly payments drastically higher than they would've been a year ago or even six months ago.

  • Even as housing prices fall, the monthly payments might put ownership out of reach for many.
  • For example, a $600,000, 30-year loan costs $1,142 more a month than it did in 2021.

By the numbers: Inventory in Boston Spiked 12.3% from August to September. But it's down 12% year-over-year, per Redfin.

  • Closed sales are down 22.1% compared to this time last year.
  • Median home prices are up 7.3% year over year, but they've fallen in the last three months.
  • In July, the median sales price was $685,000, and in September it was $649,000.
  • In May, just before mortgage rates spiked, 74.4% of homes sold over asking. In September, only 51.6% sold over asking.
  • On the flip side, only 13.2% of listings reduced their original asking price in May, compared with 29.6% in September.

Bottom line: Home prices are coming down as mortgage rates curb demand, but the market is still tight and pricy.

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