The Boston rental market has continued the steady rebound that began back in April. Most free rent concessions which were the norm just 4 short months ago have gone by the wayside and fees are approaching 50/50 paid by landlords and tenants for those listings that are priced at market value. Rents have for the most part reached pre-pandemic levels, however there are pockets where rents still have a little ways to go. The larger 3+ bedroom apartments continue to lag behind the smaller units, mostly due to an abundance of supply. However the over-supply is slowly diminishing as roommates look to save money vs the pre-pandemic pricing for most 1-2 bedroom apartments. There are some areas in which rents have surpassed pre-pandemic prices, most notably in South Boston where rental bidding wars are becoming the norm. Although not a new concept, bidding wars are typically reserved for sales listings. In South Boston where the demand for housing far outweighs supply, bidding wars have become commonplace for both sales and rental listings. Some estimates put the likelihood of a bidding war in the greater Boston area at 70%, buyer beware.
The blazing hot sales market has continued its upward trajectory. That said, there is proof of the market “normalizing” in that the downward seasonal effect of summer beach going and new found freedom from the pandemic has caused some buyers to sit out this season in favor of vacationing. New home sales saw a drop of 6% and mortgage applications were down 9%. According to Boston Agent Magazine, condo listings were up nearly 13% last month whereas single family listings were down less than 1%. Despite the increase in the number of condo listings, the total number of listings is still at its lowest amount since 2004 when MAR started reporting data. The lagging supply has continued to push prices even higher, as property values have soared on average 24% YoY.
Inflation has been a hot button topic of late. It’s been in the back of most people’s minds since the trend of all time low interest rates began what seems like ages ago. Inflation hit 5% in May whereas the average over the past 20 years has been closer to 2%. It’s not a coincidence that inflation has increased at a time when the pandemic restrictions are being lifted and savings are at all time highs. Consumers are spending money as fast as they can on pent up demand for leisure and travel, however supply chains are still catching up which is causing increased prices across the board. There are signs that supply is improving however, as the cost of lumber and other key goods and materials have started to ease. Many experts believe that the recent pandemic related inflation will be temporary and not have a significant effect on interest rates in the short term. However the Fed is now estimating that they expect to start raising interest rates in 2023, sooner than previously expected. What does that mean for buyers for the rest of this year and likely next – probably not much. One thing is for sure, interest rates will rise but it’s likely to be at a slow pace and over a relatively long period of time. For the time being, supply (or lack thereof) remains the dominant force in the housing market.
If you’d like for Metro Realty to provide a free evaluation of the current market value for your property, please don’t hesitate to contact us anytime!