- Home prices in the Boston metro area rose sharply during 2020.
- A 2021 forecast for the Boston housing market predicted more of the same.
- This real estate market has gotten a lot more expensive in recent years.
- Low inventory and strong demand from buyers are pushing prices north.
Homes in the Boston area are selling for a lot more today than they were just one year ago. A recent report showed that the median (midpoint) listing price for the Boston-Cambridge-Newton metropolitan area housing market rose by 10% over the past year or so.
Low inventory has something to do with this trend. Like many real estate markets across the U.S., the Boston area is currently suffering from chronically low supply. There aren’t enough homes on the market to satisfy the strong and steady demand from buyers. And that’s boosting prices.
List Prices Are Rising Steadily in Boston Area
On January 7, 2021, the research team at Realtor.com published a housing market update with data through the end of December 2020. Among other things, that report showed a significant rise in real estate listing prices within the Boston-Cambridge-Newton metro area.
Note: The report mentioned here showed the median price at which homes are listed for sale — not the price at which they were sold. But both of those metrics have increased steadily over the past year or so.
According to Realtor.com’s research team, the median listing price for the Boston-Cambridge-Newton metro area rose by 10% from December 2019 to December 2020. The median list price for this real estate market reached $649,050 last month, an all-time high.
Of course, Boston isn’t the only New England city with steadily rising home values at the start of 2021. Many housing markets in the northeastern part of the country have also seen big home-price gains in recent months.
According to the January 2021 Realtor.com report:
“While prices increased nationwide, the largest gains were seen in the Northeast (+12.2%), followed by the West (+10.4%), Midwest (+8.6%) and South (+6.7%).”
But recent reports and forecasts for the Boston real estate market indicate that it’s one of the hottest markets in that part of the country.
A Strong Forecast for Boston Housing Market in 2021
Housing analysts from Zillow recently issued a strong forecast for the Boston real estate market extending throughout 2021. In January, the company’s website stated:
“Boston home values have gone up 4.8% over the past year and Zillow predicts they will rise 9.6% in the next year.”
In their estimation, the median price was around $653,000 at the end of 2020. That’s significant, when you consider it was closer to $363,000 less than a decade ago.
Like other major cities in New England, the Boston housing market has gotten a lot more expensive over the past decade. You can see this clearly in the chart below.
This chart, provided by Zillow, shows the median home value for Boston, Massachusetts since 2011. As you can see, house prices in this market have climbed steadily since 2012. In fact, the median price point for homes in the area has nearly doubled since then.
Zillow’s forecast for the Boston real estate market is shown in the green shaded area to the right. They expect prices to continue climbing in 2021.
Here’s the bottom line for anyone planning to buy a home in the Boston area during 2021. Houses in the area have grown much more expensive over the past few years. And if recent forecasts for the Boston housing market turn out to be accurate, this upward climb will continue for the foreseeable future.
Lots of Buyers, Few Properties to Go Around
Like a lot of cities across the U.S., Boston currently is still experiencing a shortage of homes for sale. There are more buyers in the market than there are properties available for purchase. And that’s putting upward pressure on prices.
This is also one of the primary reasons we are seeing strong housing market forecasts for the Boston area, stretching through 2021.
According to recent data, the city had about a 1.5-month supply of homes for sale as of early December 2020. That’s a very low level of real estate market inventory, by historical standards. This gives sellers the upper hand.
Meanwhile, there are more home buyers coming into the housing market. The city’s population grew by around 12% from 2010 to 2019. The broader metro area has also experienced steady growth in recent years.
So we have a classic supply-and-demand imbalance, real estate style. The demand for homes has grown over the past few years, while inventory levels have declined.
These same conditions are being seen elsewhere in coastal Massachusetts, as well. Dana Bull, a real estate agent in the town of Marblehead, recently told The Boston Globe:
“It’s not the news that buyers want to hear, but I think it’s going to get even more challenging, mainly because of the lack of inventory. There’s just so much demand and just not enough houses to sell.”
Disclaimer: This article includes forecasts and predictions for the Boston housing market in 2021. Such statements were issued by third parties not associated with the Home Buying Institute. HBI makes no claims or assertions about future real estate trends or prices.