Home Prices Still Rising
Home prices in Boston are on the rise due to intense competition among homebuyers, exacerbating the challenges posed by limited inventory in the real estate market.
According to the latest market report from Zillow, the summer season has witnessed unprecedented levels of activity. Prospective buyers are once again engaging in bidding wars to secure available homes, as potential sellers opt to wait out the escalating mortgage rates.
Despite the scarcity of options and the deterrent effect of rising mortgage rates on homeowners looking to sell, April saw a 10% increase in sales compared to the previous month. This surge occurred amidst a record low inventory level, indicating the eagerness of buyers to outbid one another in the face of limited choices.
Zillow's senior economist, Jeff Tucker, noted that while many homeowners are choosing not to sell in order to retain historically low mortgage rates, those who do decide to list their properties are being rewarded with intense competition from buyers. He further stated that spring traditionally marks the peak activity in the housing market, and 2023 has been no exception. It remains to be seen if the usual seasonal price slowdowns will occur on schedule this year or if they will be delayed until later in the summer.
Declining inventory
The report revealed that new listings in May experienced a 23% decline compared to the previous year, with inventory levels reaching record lows for this time of year. Zillow's data also indicated a 3.1% decrease in homes available for sale on their platform in May compared to the previous year and a significant 46% decrease compared to May 2019.
Climbing prices
Nationally, home values saw a 1.4% increase from April to May, representing the most substantial monthly appreciation since June 2022. The typical home value across the country currently stands at $346,856, reflecting a 0.9% rise from the previous year and a 3.4% increase from the low point in January.
In Boston, the average home value in May reached $646,902, reflecting a 1.9% increase from April.
Mortgage payments are up, too
Simultaneously, mortgage rates have also experienced an upward trajectory alongside the growth in home values. Zillow's findings indicate that the monthly mortgage payment for a typically valued home is now just under $1,800, marking the second-highest recorded figure. This represents a 22% increase compared to the previous year and is double the mortgage payment observed in May 2019.
In Boston specifically, the average monthly mortgage payment reached $3,347, signifying a significant $1,477 increase since 2019.
Rent or Buy? High prices force the question
Now, let's evaluate whether renting or buying is a better option in Boston. Assessing this decision involves considering various factors such as housing market conditions, financial stability, personal preferences, and long-term plans. Here are some points to consider:
Housing Market Conditions: Boston's real estate market has experienced rising home prices due to high buyer demand and limited inventory. This can make buying a home more expensive in terms of upfront costs and monthly mortgage payments. On the other hand, rental prices may also be influenced by these market conditions, potentially affecting affordability.
Financial Considerations: Buying a home requires a significant upfront investment, including down payment, closing costs, and ongoing expenses like property taxes, insurance, and maintenance. Renting typically involves lower upfront costs, and you won't be responsible for property maintenance. However, renting means you won't build equity, which is a potential long-term financial benefit of homeownership.
Flexibility and Mobility: Renting provides greater flexibility, allowing you to move more easily as per your changing needs or job requirements. Buying a home ties you to a specific location and might require selling or renting it out if you decide to move, which can involve additional costs and complexities.
Long-Term Goals: Consider your long-term plans and financial goals. If you intend to stay in Boston for an extended period and have stability in your income and lifestyle, buying a home can offer potential benefits like building equity, stability of housing costs (if you have a fixed-rate mortgage), and the opportunity to customize your living space.
Renting Advantages: Renting offers the advantage of predictable monthly costs (excluding potential rent increases), no responsibility for property maintenance or repairs, and the ability to redirect savings toward other investments or financial goals.
Renting Disadvantages: Renting means you are subject to the landlord's rules, potential rent increases, and limited control over your living space. It also doesn't provide the opportunity for long-term wealth accumulation through home equity.
Ultimately, the decision to rent or buy in Boston depends on your specific circumstances and priorities. It can be helpful to evaluate your financial situation, long-term goals, housing market conditions, and personal preferences to make an informed choice. Additionally, seeking advice from a financial advisor or a real estate professional who is familiar with the Boston market can provide valuable insights tailored to your situation.
How to Spot and Avoid Online Rental Scams
Today, most people hunt for rentals online, which unfortunately makes it easier for tricksters to post fake ads and fool potential renters. They might use lower-than-average rents, ask for more money, or simply try to steal your personal information, making it really hard to know which ads are real.
The Federal Trade Commission (FTC), a U.S. government agency, warns people about these scams. It encourages everyone to report any suspicious ads or deals.
Here are some common signs that a rental ad might be a scam:
- The pictures in the ad have a watermark, indicating they could be stolen.
- The ad doesn't give much detail about the rental.
- The person posting the ad doesn't want to show you the property.
- They want to close the deal quickly, without getting to know you.
- They say they are out of the country.
- They want you to wire money right away.
- The price or terms are too good to be true.
- They request a deposit 'to hold the apartment' before you've seen it.
- The rent seems much lower than for similar places.
- In Massachusetts, an ad run by a rental agent must include the name of the brokerage firm; 'blind' ads without this information are not allowed.
- If they will require you to pay a broker fee to rent an apartment, licensed brokers must provide a Fee Disclosure Form. Scammers will often either not be aware of this requirement or they'll tell you no fee disclosure is required.
To avoid falling for scams, you can:
- Google the person who's renting the place to check if they're legitimate.
- Verify the property address to make sure it's a real place.
- Use an online map to check if the place looks like the pictures in the ad.
- Visit and tour the rental in person.
- Be skeptical about property ads for which the posted rents are inconsistent.
- Use a real estate agent to help you find a place.
- For agents who claim to be licensed real estate salespersons and brokers, you can verify their licensing status online. (Select 'Board of Registration for Real Estate Brokers and Salespersons' for the licensing entity)
If you think you've come across a scam, report it to the police, the FTC, or the service posting the ad, and also inform your bank and credit card companies, especially if you think a scammer has your information. Scammers are good at what they do, and anyone can fall victim. The most important thing is to stay alert, be cautious, and report anything that seems suspicious.
Our Residential and Commercial Properties Available for Rent or Sale
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General Resources:
Atty. Richard Vetstein's Massachusetts Real Estate Law Blog
For landlords:
MassLandlords.Net
All opinions are those of the respective authors. Charles River Properties LLC employees and associates do not necessarily share the views expressed. For general information only, not legal or tax advice.
Any property information is subject to change and is from sources we deem reliable, but its accuracy is not guaranteed. Properties advertised may no longer be available and are subject to prior sale, withdrawal or changes.
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Updated 6-30-2023
Charles River Properties LLC
280 Moody Street
Waltham, Massachusetts 02453
781-899-5300 Ext 1