Boston Real Estate Market Forecast 2023

The Boston real estate market has experienced a slower start to the year as high-interest rates and lower inventory levels make a home search in the area challenging for buyers. Even so, Boston remains a desirable place to live for its rich history and culture, a strong job market supported by technology and finance companies, as well as access to several top universities. Whether you’re a buyer interested in starting a home search or a seller planning to list, here’s what to know about the future of Boston’s housing market.

For a better understanding of what to expect in Boston’s 2023 housing market, review this short summary of local trends, and then read on for an explanation of what this means for you as a buyer or seller.

Buyers searching for homes in Boston neighborhoods can expect less market competition since home sales are on the decline. This, coupled with decreasing prices for single-family homes, creates more opportunities for buyers to find a property and negotiate with sellers. While interest rates remain high, the market will likely continue cooling throughout the rest of 2023. Although buyers should brace for a seasonal uptick in spring and summer, prices should not reflect the same highs as in recent years.

The market still presents long-term obstacles for buyers that sellers can use to their advantage. Most notably, inventory levels are extremely low at only 1.5 months. Inventory is slowly growing but will likely remain under balanced market conditions for some time. New listings in March decreased by 28.1% compared to last year, further emphasizing the lack of listings available. Sellers in the city of Boston can expect their homes to go off-market in an average of 20 days.

Suffolk County is experiencing many of the same trends as Boston. Declining buyer demand is reflected in average sales and median prices. Condominiums continue to appreciate in price despite cooling trends. Here’s a quick look at broader trends impacting Boston:

Like Boston, Suffolk County is experiencing less buyer demand, resulting in fewer closed home sales and decreasing median prices. Median prices are lower in the county than in Boston. This price discrepancy is likely due to the perks of Boston’s real estate and a higher price of living. Buyers should keep this in mind when searching for properties in and around Boston in 2023.

An interesting difference between Boston and the rest of Suffolk County is the monthly supply of inventory. Although both suffer from critically low levels of inventory, Suffolk County is experiencing decreasing trends while Boston’s inventory is slowly increasing. This can make all the difference for buyers searching in the city this year compared to others in the county.

There are a few major factors impacting market trends in Boston. High mortgage rates limit a buyer’s ability to purchase a home and scare off sellers who would otherwise list their properties. For updated information on market trends, buyers and sellers should always work with Boston real estate agents like those at the Prism Real Estate Group.

Mortgage rates are expected to remain high throughout the rest of the year. The average monthly mortgage payment for a Suffolk County buyer with a 30-year fixed loan is $3,718. This is $1,342 higher than last year’s average payment of $2,376. Higher mortgage rates seriously bite into a buyer’s purchasing power and limit their choices. Currently, the average interest rate for a 30-year fixed loan in Massachusetts is 6.66%. A 15-year fixed loan has an average rate of 6.01%.

Market statistics across Boston and Suffolk County show extremely low inventory levels across the region. Even if buyers are interested, their market activity is constricted by limited listings. There are several factors that have led to persisting low inventory levels, including a previous hot seller’s market, complications with new construction, and sellers hesitant to list their properties amidst current trends.

Another major factor impacting current market trends is inactive sellers. Many sellers at retirement age are opting out of selling their homes to downsize or move to popular retirement destinations like Florida because it’s too expensive. In the midst of high mortgage rates, many sellers don’t want to risk losing the low mortgage rates they secured when conditions were favorable.

With low inventory keeping the market competitive, housing trends entering spring 2023 are expected to favor sellers. Homes today spend a very short time on the market, meaning the baseline of 180 days is well out of the question for buyers and sellers. Unless the market experiences an uptick in home listings, the spring housing season will likely remain highly priced and competitive for buyers.

Many buyers are attracted to Boston for its lively atmosphere and opportunities for higher education. Even though the market is cooling, it still remains competitive, and buyers should expect to encounter short listing times, low inventory, and increasing prices for condominiums. Sellers who take advantage of these trends should plan out their next home purchase, while buyers should weigh all the costs of homeownership before searching. If you’re interested in investing in the Boston real estate market, contact one of the agents at the Prism Real Estate Group to help guide you through the process.