The Boston housing market is very healthy, relative to the rest of the country. By Zillow’s account, Boston scored an 8.3 out of 10 on the Health Market Index. That number is considerably higher than a majority of the major metros in the United States. A combination of low mortgage rates, rising incomes and low inventory has contributed to a frenzied market in which desirable homes attract multiple offers and sell rapidly. In fact, the lack of homes for sale has been the one negative in an otherwise favorable housing market. According to Zillow, Boston is an extremely hot market in favor of sellers. Perhaps even more importantly, home prices are expected to increase by as much as 1.0% in the next year. With low mortgage rates, a strengthening economy, an expanding job market and strengthening consumer confidence, Boston will continue to be a hotbed for real estate activity.
Similar to that of every major metropolitan area, Boston’s appreciation rate has begun to ease, but prices are higher than they were one year ago. With the tempering rate, the average medium home price in the Boston housing market is $398,100. Despite slower appreciation, Boston homes are nearly twice the national average ($212,267). In reaching their current price, Boston homes have appreciated 4.2% over the last year, 0.4% less than the rest of the country.
The Boston housing market has benefited from appreciation rates and principle payments in the last three years, as equity has finally had a chance to return to many of the homes in the area. The following represents how much equity homes have gained relative to their purchase year:
As is evident by the rate of appreciation, homes in the Boston market have easily outpaced the national average.
The economic outlook continues to drive local supply and demand in the Boston housing market. In fact, the job market is the primary reason experts believe Boston will continue to thrive. The unemployment rate in Boston is 5.0%, considerably lower than the national average (6.1%). The current unemployment rate is 1.6% lower than it was last year, and strong job growth remains encouraging. Experts predict the job growth rate to reach 1.9% in the upcoming year.
While new construction traditionally drives supply, foreclosures and short sales now have a strong impact on inventory levels, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. If supplies grow, said Nela Richardson, chief economist at the online brokerage Redfin, sales should pick up because so many buyers are actively searching for homes right now.
Foreclosures will be a factor impacting home values in the next several years. In Boston 0.9 homes are foreclosed (per 10,000). This is lower than the national value of 4.0. The percent of delinquent mortgages in Boston is 6.8%, which is lower than the national value of 6.9%. The percent of Boston homeowners underwater on their mortgage is 12.2%, which is higher than Boston Metro at 10.6%.
According to Trulia, popular Boston neighborhoods include South End and Dorchester, with average listing prices of $1,083,210 and $366,228.
Boston Housing Market Summary:
See more at: http://www.fortunebuilders.com/boston-real-estate-market-trends/