With the end of the 2020 pandemic finally in sight, many of us are looking forward to what the rest of 2021 will bring. And in particular, Boston real estate trends are garnering a lot of interest.
But as we're still experiencing the turbulence of the last year and will be for the foreseeable future, the trends are difficult to evaluate. To help cut through the noise, here's where we are, where we're going, and what it will mean for the real estate market moving forward.
Boston Real Estate Prices Are on the Rise
Boston started the new year off strong, with high demand from buyers in January spurning values upward. Meanwhile, the overall availability of housing in the Boston area has decreased.
According to the Massachusetts Association of Realtors monthly report, the inventory for housing has plummeted since January of 2020. Single-family homes saw a 64% drop in availability, and condos saw more than a 26% drop.
This makes sense, as once the pandemic set in, major life events were put on hold. Not too many people were taking new jobs and moving during a once-in-a-lifetime period of social insecurity.
And the pandemic made it nearly impossible for new construction to make progress. So the rate of new homes added to the market has slowed to a crawl.
Even as construction resumes, there are now issues with building materials being unavailable. Producers of lumber, cement, and the like were forced to slow or cease production last year. And the process of getting everyone back to work full-time is still slow-going.
So in the short-to-intermediate term at least, many prospective investors are seeing dollar signs. But before you reach out to a real estate company to broker your next purchase, you'll want to weigh the prospective risks.
How Long Can It Last?
Property values rise and fall, and there are myriad factors that influence them. Combine that with the volatility of the ongoing pandemic recovery, and there is concern that what we're seeing is the beginning of a housing bubble.
But even-tempered analysts are advising people not to worry just yet. As life goes back to normal a little at a time, the expectation is that the market will start to cool down.
This is a good thing in the long-run though, as it should stem the hyper-inflation in values that tends to precede a major crash.
The Boston Market Looking Forward
For the immediate future at least, the value of Boston real estate is expected to continue ticking upwards. However, the point at which values outpace what the average homeowner is willing or able to spend is likely approaching.
It's unlikely that we'll see a true bubble burst. Property values are expected to cool as we move into the spring, but the limited availability of housing in the Boston area is expected to keep prices from dropping severely. So ultimately, values will stabilize in 2021.
But the circumstances in Boston are hardly representative of the situation nationwide. To grasp the full picture of the 2021 real estate market, be sure to keep up with all our latest property investment news.