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Where will Boston Real Estate Values be Heading in 2022?
The total value of the U.S. housing market has doubled in the last decade and is now worth $43.4 trillion, according to a Zillow analysis.
Home values grew 19.6% last year, an all-time high in Zillow’s data, which goes back more than 20 years. U.S. housing gained $9.6 trillion in 2021, topping the previous one-year increase of $3.7 trillion in 2005.
“Even in the context of a year in which several housing records were topped, the scale of the housing market’s growth in 2021 is eye-opening,” Zillow senior economist Jeff Tucker said in a press release. “Not only did prices rise faster than ever, but more homes were built than in any year since 2007 as builders raced to meet demand.”
Not surprisingly, the states with the most housing value tend to be the states with the highest populations, but there are a few outliers.
Washington, Massachusetts and Colorado are the 13th, 16th and 20th most populous states in the U.S., yet all three rank in the top 10 for total housing value.
California’s housing value grew by $1.4 trillion in 2021 and now accounts for 21.3% of the housing value in the U.S., more than the bottom 30 states combined.
The top 10 states for housing value:
- California, $9.23 trillion total housing value.
- New York, $3.18 trillion.
- Florida, $2.76 trillion.
- Texas, $2.66 trillion.
- Washington, $1.52 trillion.
- Massachusetts, $1.46 trillion.
- New Jersey, $1.38 trillion.
- Pennsylvania, $1.31 trillion.
- Colorado, $1.2 trillion.
- Illinois, $1.16 trillion.
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Boston Real Estate for Sale
According to the latest CoreLogic Home Price Insights Report, nationwide home values increased by 8.2% over the last twelve months. The dramatic rise was brought about as the inventory of real estate for sale reached historic lows at the same time buyer demand was buoyed by record-low mortgage rates. As CoreLogic explained:
“Home price growth remained consistently elevated throughout 2020. Home sales for the year are expected to register above 2019 levels. Meanwhile, the availability of for-sale homes has dwindled as demand increased and coronavirus (COVID-19) outbreaks continued across the country, which delayed some sellers from putting their homes on the market.
While the pandemic left many in positions of financial insecurity, those who maintained employment and income stability are also incentivized to buy given the record-low mortgage rates available; this is increasing buyer demand while for-sale inventory is in short supply.”
Where will Boston real estate values go in 2021?
Boston real estate price appreciation in 2021 will continue to be determined by this imbalance of supply and demand. If supply remains low and demand is high, prices will continue to increase.
Boston Housing Supply
According to the National Association of Realtors (NAR), the current number of single-family homes for sale is 1,080,000. At the same time last year, that number stood at 1,450,000. We are entering 2021 with approximately 370,000 fewer homes for sale than there were one year ago.
However, there is some speculation that the inventory crush will ease somewhat as we move through the new year for two reasons:
1. As the health crisis eases, more downtown Boston condo owners will be comfortable putting their houses on the market.
2. Some Boston high rise condo owners impacted financially by the pandemic will be forced to sell.
Boston Housing Demand
Low mortgage rates have driven buyer demand over the last twelve months. According to Freddie Mac, rates stood at 3.72% at the beginning of 2020. Today, we’re starting 2021 with rates one full percentage point lower than that. Low rates create a great opportunity for homebuyers, which is one reason why demand is expected to remain high throughout the new year.
Taking into consideration these projections on housing supply and demand, real estate analysts forecast homes will continue to appreciate in 2021, but that appreciation may be at a steadier pace than last year. Here are their forecasts:
Boston Real Estate and the Bottom Line
There’s still a very limited number of Boston Seaport condos for sale for the great number of purchasers looking to buy them. As a result, the concept of “supply and demand” mandates that Boston condo values will continue to appreciate.