Boston Real Estate: 2015 Year in Review
As we come off 2015 we have seen positive real estate market activity and experienced continued year over year improvement. Statistics prove to be strong with the number of sales in Boston increasing overall citywide from 3,147 in 2014 to 3,211 in 2015.
As we take a closer look at each neighborhood, each has seen positive growth in one way or another. Seldom were there less sales than in 2014, but most showed an increase in average sales price and all achieved much success in the average dollars per square foot.
Long term and historically established residential neighborhoods show many sales. Emerging neighborhoods like Seaport and Midtown had large gains in both number of sales and dollars per square foot. Numerous, newly constructed buildings being erected in these neighborhoods, most being full service luxury residences account for the higher sales dollars that show. Given that inventory still has not quite caught up to the surplus in demand, the average days on market remains low and on average between 1 and 2 months. Overall, the numbers show a clean bill of health for our city.
|Neighborhood||Unit Sales||%+/-2014||Ave Sale Price||%+/-2014||Ave $PSF||%+/-2014||DOM|
The positive growth isn’t something just specific to Boston. Nationwide new home sales were up 10.7% which is good sign. The number of cash sales has also fallen. According to the Boston Business Journal, cash sales were down over 18% this past August in Massachusetts. Much like the Commonwealth, the nation’s cash sales to total sales ratio was also down 3.2 percentage points overall. As the economy has strengthened it has driven home prices up to pre-recession levels making cash sales more and more less frequent with less distressed properties being scooped up by cash investors.
Looking Ahead into 2016
There are many signs that 2016 should prove to be just as good as 2015. Rates were supposed to increase in 2015 in which they did, but then they also had their dips. A similar trend is expected for 2016 with the end result being forecasted at slightly higher percentage points than that of today. This is expected to raise the average monthly cost of a mortgage payment which may of course affect what one can afford, however, this should not be enough where it is preventative for buyers to enter the market.
Who is being active in the market? In 2015 Millennials had been a significant portion of the sales for the year. In fact, Realtor.com tells us that they accounted for nearly 2 millions sales which is nearly one third of all transactions for the year. Meanwhile, both Gen Xers and Baby Boomers shall also play their role in the movement of the real estate industry. Gen Xers looking to trade up along with the empty nester Baby Boomers looking to downsize will make up the majority of the balance of activity that we see.
Heading into Boston, many empty nester couples state that they are cutting their home size dramatically and living in a fraction of the space of their suburban residences. What they have come to realize is that they still have much of the same function only on a smaller scale and making plans can be last minute when you are not arranging for a drive into the city. In fact, it has been reported that many of these newer buildings like Millenium Towers and The W have sold a significant percentage of their residential units to those who have sold their large suburban home and are in pursuit of an urban lifestyle.
We have only scratched the surface into the year, but considering all economic factors as well as current trends, all signs point to a great 2016.