Boston Home Buyers Face Thriving Market
The national real estate market has been a mixed bag for home buyers. On one hand, mortgage rates have been hovering at or above historic lows. This is incredible for home buyers because they can save considerably on their purchase over the life of their home loan. On the other hand, housing inventory has been at all-time lows. The high demand and low supply has caused home prices to shoot up to all-time highs. Rising home prices have made some home buyers reluctant to jump in and purchase a house. However, those that did make the leap have seen the values of their home rise in a short period of time. That is why homeowners all across the country are now flush with equity. While all of these trends hold true for the national real estate picture, similar trends are also true for Boston home buyers.
Boston Home Prices Surging
Home buyers in Boston and all over Massachusetts are seeing a real estate landscape where prices are skyrocketing. Nearly every neighborhood, town, and city in Massachusetts are watching home prices rise. It does not matter if you are in Quincy, Dorchester, Waltham, or anywhere else, prices are rising. The latest real estate data from November is now available and two of the national trends are alive and well in our backyard. First, housing inventory has reached all-time lows. Second, home prices have reached record highs. One year ago we were in the middle of a surging real estate market. Yet, home prices in the past month were up 14 percent from last year’s level. This is a 30 percent increase from 2019 prices.
While rising home prices is not unique to Boston, it does seem like it is happening on a bigger scale here than in other places. Boston is home to the second priciest zip code in the United States. The 02199 zip code takes the second place honors as it has seen home values rise over the past 18 months. The Prudential area is on this list as the average home price is now at $5.5 million. There are six other zip codes in Massachusetts that have made their way to the top 100 priciest zip codes of 2021. Only four were on last year’s list. Beacon Hill is also on the list, along with the 02108 zip code that is in downtown. The other five communities in Massachusetts on the list are Nantucket, Weston, Wellesley Hills, Waban, and Chilmark. All over the state, home prices and values are rising.
Should Boston Home Buyers Wait?
With home prices rising so dramatically, it might cause a lot of home buyers to consider whether they should wait. The idea of getting a mortgage for some of these prices might seem unpalatable to some potential buyers. However, when you take into account the overall landscape of Boston real estate and home loans, Boston home buyers are better off buying now.
First-time home buyers are a group that might uniquely face sticker shock because of today’s home prices. When most people think of first-time home buyers, they think of someone buying a starter home. But, in today’s market, even starter homes come with big price tags. What is important for first-time home buyers to consider is that the decision to buy a house or not buy a house does not occur in a vacuum. There are opportunity costs to not buying a house.
For instance, the decision for a first-time home buyer to not buy a house is also a decision to continue renting. If you do not think buying a house is not affordable, then you should really pay attention to rent prices. Rent is also at an all-time high, but the difference between rent and home prices is that rent is rising even faster. Some analysts predict that rent will rise by as much as 30 percent next year. The decision to not buy a house does not make sense in the context of trying to save money. You are going to spend money on housing, the question is will you be spending it on your mortgage or giving it to your landlord.
The other big consideration that home buyers should consider is mortgage rates. Boston home buyers have it great right now, but that could all change in the near future. Many expect that mortgage rates will rise in 2022 once the Federal Reserve raises interest rates. It is no secret that inflation is getting out of control. All you need to do is fill up your gas tank or go shopping at a grocery store to get a gauge of inflation. Inflation is an important consideration for home buyers for a couple of reasons. First, real estate is a hedge against inflation. As other prices rise, so do real estate values. Second, the best tool the Federal Reserve has to curb inflation is to increase interest rates. This means that today’s rock bottom mortgage rates will not be around forever and that home buyers should act now rather than waiting.
Final Thoughts
Home prices are only going in one direction in the near future and that is up. Waiting to buy a house because of today’s prices does not make sense because they will be even worse tomorrow. This means you lose out on the benefit of rising home values. Buying a house at today’s prices means that you benefit from tomorrow’s rising prices. On top of that, the likelihood of rising mortgage rates means your mortgage will be more expensive. Today’s real estate market is thriving all over the nation, but especially in Boston. Mortgage rates are favorable now, so it makes sense to act.
Waiting to buy a house in hopes that tomorrow will bring a better deal is a fool’s errand. Instead, it is best to take advantage of today’s market and speak to a trusted mortgage broker. The professionals at Peoples Choice Mortgage can give you a complimentary mortgage qualifier. This will let you know exactly what your budget is in today’s market, which will allow you to decide if buying a house right now is the best decision for you. Either way, it is always best to make a decision with all the information. Choosing to not buy a house simply because of today’s prices gives you an incomplete picture. Speak with a professional, get all the numbers, and then decide if now is the right time for you.
