There is a trend among employers in the U.S. that is also occurring in and around downtown Boston. Companies are relocating, consolidating or expanding their headquarters in the vibrant, urban core. One of the reasons is the pursuit of younger, educated talent who are typically concentrated in cities. For Metro Boston, this employer trend includes companies such as General Electric, Partners Health Care, New Balance, Reebok and a regional office of Global Atlantic.
The challenge is accelerating Boston home prices and lack of inventory for sale. That means the demographic that these companies may be seeking — millennials — are being priced out of the Metro Boston real estate market. Furthermore, there is an extreme lack of inventory which is driving down sales and accelerating prices throughout the metro area, suburbs and even the entire Commonwealth of Massachusetts.
Millennials (ages 18-33) comprise the largest group of home buyers nationally, according to a “Home Buyer and Seller Generational Trends” report published last year by the National Association of Realtors. The study also found that despite many millennials preferring to live in an urban setting, the need for additional space and affordable housing has led them to purchase homes in the suburbs. The report concluded that last year only 15% of millennial buyers bought in an urban area, which was down from 21% three years ago.
Massachusetts saw a dip in home sales and increase in prices year over year. The Massachusetts Association of Realtors reported last month that despite the drop, median home prices for both single-family homes and condominiums hit all-time highs. The inventory also reached the lowest level for the season since MAR began recording the data in 2004.
For Greater Boston, the Greater Boston Association of Realtors found that year-over-year sales, days-on-market, and inventory are also down. As a result, prices are at an all-time record. Sales of single-family homes declined 2.2% while the median price increased 13.1% to $600,000. Inventory declined 29.6% while days-on-market declined 23.9%. Similarly, sales of condominiums are down 4.3% while the median selling price is up 8.9% to $525,381. Condominium inventory declined 17.5% and days-on-market is down 24.3% for the same time period.
Boston (cities and towns approximately within 15 miles of downtown Boston) is experiencing the same trends as the region and state according to GBAR. The median selling price of single-family homes is up 7.9% and condominiums increased 8.1% year-over-year. Inventory for single-family homes is down 29.4% and down 12% for condominiums. Sales for single-family homes saw an uptick of 1.5%, whereas condominium sales are down 4.6% year-over-year.
The current president of MAR stated “It’s not often that you see sales go down and prices hitting all-time highs. However, with the number of homes for sale so low, and demand so high, this is what we get. While we’ll be okay in the short-term if we don’t find a way to produce more housing our economy will feel the impact.”
The trend of employers gravitating closer to Boston and the lack of affordability and availability of desired housing may require more employees to commute. For Greater Boston, as in many large cities, this can present a challenge. The possible solutions for this would be to consider close-in towns that may have homes on the comparatively lower end of the price spectrum and to be close to a commuter rail line. Examples of this include town such as Dedham, Norwood, Natick, Medford, and Beverly. There are also new developments by the train that may include condominiums in the future — Boston Landing in Allston/Brighton and University Station in Westwood.
Courtesy of Market Watch and credited to Norman Holbrook.
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