Rising Prices: Persistent Increase in Massachusetts Housing Market
Mortgage interest rates have surged, reaching almost double what they were a year ago. Despite this, market analysts are reporting that the prices of single-family homes and condominiums in Massachusetts continue to break records, making homeownership increasingly challenging. The recent report from The Warren Group reveals a decline in sales activity for both single-family homes and condominiums in July, with drops of over 23% and 14%, respectively. However, due to fierce competition and limited inventory, median sale prices have reached unprecedented levels. Cassidy Norton, Associate Publisher and Media Relations Director at The Warren Group, emphasized the continued demand from prospective buyers but acknowledged the struggle to keep up with inventory demand.
In July, Massachusetts saw 4,085 single-family homes sold, a 23.1% decrease from the previous year. The median sale price of a single-family home climbed to a monthly record high of $610,000, marking a 4.3% increase compared to the previous July. Year-to-date figures show a 24.6% drop in single-family home sales compared to 2022, with a 2.3% increase in the median sale price to $565,000.
Zillow data compiled by NerdWallet reveals that the average interest rate on a 30-year fixed-rate mortgage now stands at 7.247% APR, compared to 5.267% a year ago.
According to Theresa Hatton, CEO of the Massachusetts Association of Realtors (MAR), the state’s chronic lack of housing inventory is hindering year-over-year growth. Many potential sellers are hesitant to list their homes due to favorable existing mortgage rates and the challenges of entering the competitive buyers’ market once their current homes sell.
While the article highlights the contrasting trends in mortgage interest rates and housing prices, it ultimately underscores the ongoing struggle in Massachusetts’ real estate market driven by inventory shortages and intense demand.
According to MAR, the real estate market in Massachusetts experienced a decrease in new listings for single-family homes by 26.7% and for condominiums by 17.6% year-over-year in July. Year-to-date, new listings compared to 2022 were down by 25.1% for single-family houses and 20.6% for condos, as reported by MAR.
The current competitive market and limited inventory have favored sellers. MAR stated that single-family homes sold in July achieved an average of 102.9% of their original list price.
In July, the condo market saw similar trends as the single-family home market, according to The Warren Group. Condo sales decreased by 14.3%, with 1,886 units sold compared to 2,201 units in July 2022. However, the median sale price increased by 6.5% year-over-year, reaching a new all-time high of $555,000. So far this year, there have been 11,270 condo sales in Massachusetts, a 22.2% decrease compared to the first seven months of 2022. The median sale price has also risen by 4% to $519,900.
“Traditionally, condos have provided a more affordable housing option compared to single-family homes. However, with the median price consistently above $500,000 in the last three months, prospective buyers will face challenges in achieving homeownership,” highlighted Norton.
The affordability crisis in Massachusetts has intensified with the impact of the pandemic in 2020. This has created housing insecurity for many residents, especially as the state experiences an influx of immigrant families in search of shelter and employment opportunities.
Governor Maura Healey has brought attention to the shrinking capacity of the state’s emergency shelter system and declared a housing emergency. She attributes part of the problem to the long-standing shortage of affordable housing in Massachusetts.
The high cost of living in Massachusetts also hampers the state’s competitiveness against more affordable locations like Florida, Texas, and North Carolina. Since taking office in January, Governor Healey has pledged to address the barriers that hinder the residents and the state, including the soaring housing expenses.