Boston’s market for condo sales looks to be eroding in the face of rising interest rates and inflation. Total condo sales in the city last month were 325, a sharp -43.48% drop compared to August 2021. Last month, the Fed raised interest rates for the 4th time in 2022 to try and control rampant inflation. It seems to have stifled demand for Boston real estate, as last month's total sales were the lowest for September in the last 5 years.
We can expect to see more of the same as we head into Q4, typically the low season for Boston’s real estate market. This week’s news of another rate adjustment of +75 basis points will continue to squeeze smaller buyers out of the market. If the recession drags on and mass corporate layoffs ensue, we could see demand destruction on par or worse than what we experienced after the last housing market crash in 2009.
With this in mind, it will only be a matter of time until Boston’s median sale price begins to come back down to earth. It is already trending down since it peaked at $825K in April of this year, but as of now August’s median sale price for condos ($759K) is still up +11.03% year-over-year. Look for Boston’s 30 day median sale price for condos to finish closer to $700K by December.
Price-per-square foot for Boston condos is currently up by +3.63% since last August. However, last month’s $827 cost per square foot for condos was the lowest level recorded since August 2021 and has come down considerably since the beginning of the year. All of these trends are pointing towards price corrections for Boston’s housing market.