Wednesday, April 16, 2014
Boston's Housing Shortage Puts Home Sellers in an Advantageous Position
A strikingly low inventory of homes for sale in Boston continues to drive area home prices up at a record pace. The inventory of single-family homes was down more than 20 percent in January 2014 from a year earlier. This low supply, coupled with a rising demand, has prompted double-digit monthly increases in the median sale price of a single-family home in seven of the last 12 months, pushing prices to a level not seen since 2008.
Seeking to ameliorate the housing shortage, Boston Mayor Martin Walsh announced the creation of a housing task force in April 2014. Its assignment is to come up with a four-year plan to produce new senior, low-income and middle-class housing options. But until such plans are implemented, Boston's housing costs and scarcity are expected to increase. Despite projected below-average population growth, the Boston area's economic growth will continue to be propelled by a strong job market backed by the healthcare, construction and technology industries. The Boston home seller will maintain the upper hand in the current market, and FSBO (for sale by owner) sellers listing their homes without the services of a real estate agent will further benefit, saving the agent’s 6 percent commission, an average of $19,806 in the Boston market.
Driven by the low availability of housing and high cost of renovations, Boston-area home buyers put a high premium on houses in top shape. According to a 2014 Survey of Home Buyers and Sellers conducted on behalf of ForSaleByOwner.com, the most important consideration for home buyers in the Boston market is that the home is in move-in condition. Tied for second place on the list of key features in a prospective home are a new or renovated kitchen and a garage or carport. A yard and central air round out the top five home amenities for Boston buyers. The most common deal breakers are a home not being in move-in condition and a lack of a garage, yard, central air and natural light.
Boston offers a wealth of architectural styles in its residential neighborhoods, which date back to the city's establishment by Puritan colonists in 1630. Beacon Hill, where the founding families and such New England luminaries as Louisa May Alcott made their homes, features brick Federalist rowhouses along gaslight-lit streets with red-brick sidewalks. Back Bay offers beautifully preserved 19th-century Victorian brownstones, such historic buildings as the Boston Public Library and a wealth of shopping and dining options. West Roxbury, the site of a mid-19th century transcendentalist Utopian community, has well-maintained examples of Georgian and new Gothic architecture. The waterfront community of Charlestown offers the feel of a small town with the benefits of proximity to the city.
A range of suburban residential communities surround Boston. To the west are Worcester, the "Heart of the Commonwealth," which hosts historic examples of Victorian-era mill architecture, and Wellesley, a charming college town with distinctive architecture and a walkable downtown. The city of Dover offers a wide assortment of recreational opportunities and equestrian events and has become a sought-after residential community featuring expansive estates and new housing construction. Brookline and neighboring Newton host some of the state's most expensive homes, including a Georgian Revival manor dating back to the late 1920s, on the market in 2014 for more than $17 million.
Up next: Seattle, where an increasing inventory of homes will likely ease recent record-setting prices, but higher interest rates will create affordability challenges.
See what other cities made our Top Real Estate Markets list.