In 2021, the cost of a single-family home in Massachusetts rose more than 16%, with the median price climbing above $500,000. As we settle into 2022, there are already signs that the market is shifting. What can you expect from Boston Hill real estate this year? Experts are projecting a less intense market that could encourage more homeowners to sell. With the year-to-year demand for homes in properties in Boston remaining high, the Beacon Hill market will stay competitive and pricey.
If you’re looking to purchase or sell Boston real estate, you’ll want to know what to expect from the Boston market.
Higher mortgage rates
The historically low mortgage rates seen in 2020 and 2021 have started to increase, with 30-year, fixed-rate mortgages rising to between 3-4%. At this time, 15-year rates remain under 3% with some lenders, but overall rates are projected to continue rising.
Rising rates mean it will be more expensive for buyers to borrow money. Experts expect one of two things to happen as a result. On one hand, the rising rates may encourage buyers to start looking before the rates climb even further. Current mortgage interest rates are still considered low and may not dissuade many buyers from pursuing pre-approval and getting into the real estate game in 2022. On the other hand, some buyers may decide not to pursue a new home or rental property now that the rates have climbed higher. They may wait to see if the market rates will dip again.
Rising rates mean it will be more expensive for buyers to borrow money. Experts expect one of two things to happen as a result. On one hand, the rising rates may encourage buyers to start looking before the rates climb even further. Current mortgage interest rates are still considered low and may not dissuade many buyers from pursuing pre-approval and getting into the real estate game in 2022. On the other hand, some buyers may decide not to pursue a new home or rental property now that the rates have climbed higher. They may wait to see if the market rates will dip again.
Moderate price increases
Since 2020, real estate prices have been increasing by percentages well above 10%. Some experts expect this to slow in 2022, with price jumps happening closer to 5% or lower. Others, however, cite the Boston area as one of the most in-demand locations in the nation. Boston real estate could continue to see higher prices in 2022, depending largely on the changes in both supply and demand.
If sellers continue to hold out and buyers continue to seek Beacon Hill homes, prices will continue to climb and deals will settle well above the asking price. With Beacon Hill being home to top industries like health, finance, data science, and software development, it isn’t likely that demand will slow significantly. However, smaller price increases and higher mortgage rates are both good reasons to believe that there will be a better balance between supply and demand in 2022.
If sellers continue to hold out and buyers continue to seek Beacon Hill homes, prices will continue to climb and deals will settle well above the asking price. With Beacon Hill being home to top industries like health, finance, data science, and software development, it isn’t likely that demand will slow significantly. However, smaller price increases and higher mortgage rates are both good reasons to believe that there will be a better balance between supply and demand in 2022.
Greater incentive to sell
Increasing mortgage interest rates will likely dissuade some buyers from investing, though the rates are still fairly low. The Boston real estate market can be expected to continue seeing strong demand, however, sellers may start feeling the pressure to jump into the game. With interest rates rising, they may anticipate the number of buyers to decrease. Some experts expect that sellers who have been waiting to put their homes on the market will do so in 2022.
The pandemic also plays a role as travel restrictions are lifting in many places and remote work is becoming a permanent option for many. This could influence how homeowners are thinking about their current location and whether or not they decide now is the time to move somewhere new.
If there is an upswing in inventory, that’s good news for sellers hoping to buy as well. In the 2020 and 2021 markets, many sellers likely kept their homes off the market for fear of struggling to buy a new home once they sold theirs. With less competition this year, there will be a greater incentive to finally bite the bullet.
The pandemic also plays a role as travel restrictions are lifting in many places and remote work is becoming a permanent option for many. This could influence how homeowners are thinking about their current location and whether or not they decide now is the time to move somewhere new.
If there is an upswing in inventory, that’s good news for sellers hoping to buy as well. In the 2020 and 2021 markets, many sellers likely kept their homes off the market for fear of struggling to buy a new home once they sold theirs. With less competition this year, there will be a greater incentive to finally bite the bullet.
Why invest in Boston real estate?
Beacon Hill has historically been a strong investment opportunity and will remain so in 2022. A 10-minute drive from Harvard, MIT, Northeastern, Emerson, and Boston University, it’s a great option for those looking to bring in student rental income. In the 2018-2019 school year alone, there were over 150,000 students in the Boston area, many of whom lived off-campus due to the limited availability of on-campus housing. Though some of the area’s colleges are in the process of creating more dorms and residences on campus, off-campus housing will continue to draw in students. This means investors should continue thinking of Beacon Hill as one of the top locations in the country for owning a rental property.
Beacon Hill is also steps from public transit and is in close proximity to the Boston Museum of Fine Arts, Fenway Park, the New England Aquarium, and the Paul Revere House. Residents will have access to all these sights as well as multiple hospitals, parks, and libraries.
Boston real estate is expected to remain competitive in 2022, with the potential for slight changes in inventory. Rising mortgage rates and slower price increases mean hesitant sellers may be more likely to put their houses on the market. It’s projected that 2022 will be a better year for buyers, but they shouldn’t expect the market to slow too much. Reach out to trusted local agent Dylan Costello for expert service.
