BOSTON – Home sales transactions in Boston were down 35 percent for the third quarter of 2022 compared to the same period last year, the result of 20 percent less inventory and prices that continued to creep up, according to the Advisors Living’s Quarterly Market Report, issued today.
Despite rising interest rates, low inventory and fewer competing listings “bode well for sellers, who enjoy less competition and a buyer profile more willing to overlook contingencies and pay top dollar,“ the Advisors Living report said.
Advisors Living is the residential sales platform of associated with Boston Realty Advisors, the largest independent real estate brokerage based in Boston.
“Rising interest rates historically have created equity opportunities for buyers, because as interest rates go up prices go down,” observed Merit McIntyre, Chief Executive Office of Advisors Living.
“My advice for many is, ‘Buy the home, rent the rate’,” McIntyre said. In other words, motivated buyers can purchase a home at a discounted price compared with a low interest rate environment, then refinance at a lower rate a few years down the road.
Although residential prices in Boston were up somewhat over the third quarter of 2021, they were down 5 percent from the second quarter of this year. On average, homes sold for 99 percent of asking price during this period. Homes are taking longer to sell than during the second quarter.
“The suburban markets continued to see a demand that exceeded supply,” the Advisors Living report said. But rising interest rates “led to a decrease in bidding wars and some hesitation on the part of would-be buyers.” Price reductions, which were rare in recent previous quarters, are becoming more common.
Data from the third quarter indicate that some buyers, in anticipation of further rising interest rates, are moving now rather than waiting.
“This quarter saw a return to pre-COVID volume, and the number of units transacting is starting to normalize,” the report said, attributing the change to climbing interest rates and stock market volatility that has negatively impacted purchasing power.
Nevertheless, the average price of sold units continues to rise in many submarkets because of the lack of inventory on the market in both the city and the suburbs.
As more luxury development construction continues, the amount of future inventory on the market is growing. Prominent among those are St. Regis Residences, in the Seaport; Winthrop Center, in Midtown, or the Financial District; and Raffles, in the Back Bay. All are selling pre-construction at the top of the market, as well as One Dalton, in the Back Bay, with residences at Hines at South Station soon to follow.
“It is likely that there will be a shift from a seller’s to a buyer’s market in the coming year,” the Advisors Living report concluded.
The Advisors Living Quarterly Market Report includes data from most neighborhoods within Boston’s urban residential condominium market along with single family markets in many suburban communities. The Advisors Living research team creates the report using reliable sources including MLSPIN, MAR, GBREB, LINK and public sales records through the Registry of Deeds.
The full report can be viewed at https://s3.amazonaws.com/files.usmre.com/8458/blog/Q32022_ResidentialReport_AL_Final.pdf