Boston Real Estate Market Talking Points

The Greater Boston Real Estate Board (GBREB) recently published seven talking points regarding the Boston (specifically “greater” Boston, which involves suburbs outside the core downtown) real estate market. All of them are quite interesting, and could be approached and/or discussed from many angles. Here they are:

1. The past year was the fifth best on record for residential home sales in Greater Boston with more than 20,000 detached single-family homes and condos sold in 2007. After declining in 2006, sales of detached homes and condos each rose modestly last year in Greater Boston, making it the only region of the state to report an increase in sales activity over the prior year, according to Boston MLS data.
2. While home prices declined nationally in 2007 and have fallen in much of Massachusetts for the past two years, home values have stabilized in Greater Boston as the median selling price for detached single-family homes was unchanged at $480,000 in 2007 from one year earlier. Meanwhile, in the condo market, the median price for sold units rose a modest 4 ½ percent to $356,000 in 2007.
3. Despite the recent correction in home prices, housing is a solid long-term investment. In fact, median home prices in Greater Boston have increased an average of 6.5% per year over the past decade, and remain 20% higher than they were just five years ago ($480,000 in 2007 vs. $400,400 in 2002).
4. The inventory of unsold homes remains plentiful at many price points, but the supply of single-family homes and condos has shrunk substantially in the past year by 14 percent. At the end of 2007, there was a 6 ½ month supply of homes and condos for sale in greater Boston real estate compared to a nearly 8 months in 2006, indicating the market has become more balanced between buyers and sellers over the past year.
5. Massachusetts ranks among the bottom five states nationally for annual housing permits per capita, largely due to strict zoning regulations that limits new housing production. This fact, along with strong housing demand from a large immigrant population locally and much more modest real estate investor activity in Greater Boston in recent years should insulate the region from any severe price correction.
6. When looking to buy, it’s virtually impossible to time the market. With mortgage rates having declined and now averaging near 6 percent for a 30-year fixed loan, home prices having stabilized locally, and many homeowners motivated to sell, this spring should be a good time to buy.
7. Although mortgage lenders have tightened lending standards, financing remains readily available for creditworthy borrowers. Importantly, however, consumers with credit scores under 680 can expect to pay higher rates and points this spring following pricing changes that Fannie Mae and Freddie Mac will impose in March. Thus, those currently in the market may wish to act sooner rather than later to buy.