Advisors Living presents the Residential Market Reports for Q1 2023. This comprehensive study includes Greater Boston and many prominent nearby suburbs. The Advisors Living dedicated research team used data that we deem reliable from sources such as MLS PIN, LINK, MAR, NAR and public sales records through the Registry of Deeds.
The first quarter of 2023 brought many new homebuyers into a market already lacking sufficient inventory to meet demand. Late winter and early spring are traditionally a time of imbalance in the market, as many buyers begin their home searches early in the year while many sellers delay listing until late spring. With first quarter listing activity reaching its lowest level in nearly 30 years, buyers faced extremely challenging conditions.
Most of Boston’s neighborhoods experienced a decline in units listed and transacted, and an increase in selling prices. Condominium units listed city-wide were down 30%, and consequently 24% fewer homes transacted. The median sale price increased 8% to $913,500. Homes sold an average of 6% faster than during the same period in the prior year, lasting approximately 1½ months on the market. Despite the impact higher mortgage rates have had nationally, sales were still commanding top dollar across the city of Boston. The first quarter presented a slightly less competitive field for offers which encouraged buyers who had been on the sidelines or made COVID-19 purchases that they’d since rethought, those needing for more space or higher quality quarters, and renters preferring homeownership in lieu of rising rent costs.
Suburban communities saw a 20% decline in listing activity and a corresponding drop in home sales during the first quarter, as higher interest rates and lack of buying options prompted many would-be sellers to remain in their existing homes. Statewide, the supply of available single-family homes rose by 26% relative to 2022, but inventory remained 64% below pre-pandemic levels seen in the first quarter of 2019. Demand continued to exceed supply, causing fierce competition, fast market times, and bidding wars for competitively priced properties. However, buyers showed reluctance to act on homes priced too aggressively, and longer market times for those properties resulted in lower selling prices. Change in sale price varied by community, with the median price increasing by 5% in Essex County, remaining the same in Middlesex and Plymouth Counties, and decreasing by 5% in Norfolk County.
Several urban and suburban communities saw newer developments, such as Stratus in Brighton, begin closing units, which caused a significant increase in average sales price (up to 40%) as well as average price per square foot.
While many ultra-luxury developments including Winthrop Center, St. Regis, Raffles, and One Dalton continued to be marketed in the first quarter, they will be further challenged by the addition of new luxury projects which are expected to actively start selling in the middle of 2023 (South Station, 1515 Commonwealth). Many other smaller developments are expected to debut later this year, including the first net zero building in Somerville.
Despite mortgage interest rates lingering above 6%, buyer demand remains strong as we enter the spring homebuying season. The year-to-date decline in sales activity reflects an insufficient supply of available homes. Many experts believe interest rates have reached their peak, and any reduction in rates as the year progresses would help stimulate sales by enticing existing homeowners, who are currently reluctant to abandon their attractive interest rates, to list their homes and move on.
Our Residential Advisors are experts in their local markets and will help you achieve your Real Estate goals. From the city to the suburbs, and from Nantucket to Maine – our leadership and our team of respected Advisors look forward to collaborating and guiding you through your next transaction.
