Real Estate Investment in Boston: What's Trending?
Boston has always been a great place to live. The large metropolitan area provides plenty of opportunities for people to enjoy life and work, especially in the health sciences industry. The famously high home prices may make investors wonder about the wisdom of getting involved in the area, although there are many reasons to do so. If you’re wondering, “Is Boston real estate a good investment?” we can show you all the potential the area has to offer.
1. Home Sales Are Still Increasing
Home sales, which usually taper off significantly during the fall and winter, are staying higher than the average. November 2021 had a significant increase from 2020, according to the Greater Boston Association of Realtors. Specifically, condominium unit sales in the area rose dramatically- 35% in 2021.
The National Association of Realtors estimates that home sales will continue to grow in 2022. For the Boston area, the NAR predicts:
- Home values will rise an average of 7.5%
- Total sales will increase by nearly 4%
- Rental demand will outpace home prices, reflective of a continual housing shortage
The rise of home sales indicates that demand will remain high in the future. In November 2021, the GBAR estimated that Boston had less than one month’s supply of single-family homes and less than two months for condominium units, compared to the national average of more than six months’ supply.
2. Home Values Will Rise in 2022
Boston real estate trends have shown impressive growth over the past year that experts predict will continue in 2022. The GBAR reports that single-family homes increased in value by more than 10% in 2021 to $750,000, while condominium units rose nearly 6% to $625,000. The NAR’s estimate that home prices will rise by 7.5% in Boston is consistent with predictions of similar increases in other regions of Massachusetts and New England as a whole.
Compared to the NAR’s estimate of a nearly 3% increase in sale prices for the nation, 7.5% for Boston is notable. It indicates that many still see the metropolitan area as an attractive place to live and work. Renovo’s loan programs can help investors determine the best way to maximize their investment.
3. Housing Demand Is Cooling, But Only Slightly
Boston real estate market trends indicate that while the Greater Boston area is still highly popular, demand is finally starting to cool. However, this is not from a lack of buyers, but from an increase of homes available for sale. An influx of available properties caused prices to briefly drop in the early fall of 2021, although they seemed to recover by late November.
The Boston Globe reported that in spring of 2021, 21% of homeowners said they would consider selling their homes within a year. That number had risen to 26% by the fall. Experts suggest that homeowners have been debating how best to approach their housing needs in relation to the pandemic, and are now better prepared to make a choice.
A continuation of buyer interest balanced by a slight increase in available homes is a great opportunity. Investors will not have to fight as hard to find available properties, counting on a steady market to get the best prices.
4. Rental Demand Will Increase
Finding available properties to buy in Boston requires a trained eye, but the rental market is even hotter. As with other regions, the pandemic caused a sharp increase in Boston’s rental vacancy rate, as reported by WBUR. For the Greater Boston area, it was temporary. By fall 2021, vacancy rates had sunk to 3% and the cost of a two-bedroom unit had recovered to its pre-pandemic average of $2,500 per month. The area is once again favoring landlords, but the strength of the market may depend on individual neighborhoods.
This is a prime circumstance for investors looking for rental properties. Predictable growth in home sales and values, coupled with a rental market with high demand, gives investors multiple opportunities to reap a great return.
Real estate investment in Boston has nearly always been a good idea, and now is an excellent time to get started.
At Renovo Financial, we help investors turn their investment ambitions into reality.
Contact us today to get started.