The City of Boston is one of the most populated cities in the country. Popular for its museums, colleges, tours and sightseeing, the historic Boston metropolitan area is home to 4.8 million people and growing. With a little something for everyone, it’s a beautiful place to live, visit and retire. In fact, the Boston real estate market has recently seen an increase in households during the past year.
Current Boston Market Conditions
- Home prices are up 12% year-over-year in the Boston metro area.
- There are 8,000 new households in Boston since this time last year.
- The housing supply is down to just a 1.4-month supply.
Buying a House in Boston
Boston Home Prices
Boston median home value: $605,000
National average: $371,000
Median home prices in Boston have gone up almost $200,000 in the last 5 years. In just the past year they’ve increased 12%. Nationally, home prices have risen 22.4% in the last year, but overall in the last 5 years, Boston has seen a more impressive price increase for homes. Both are continuing to soar to new levels that have been unheard of in recent years. Most of Massachusetts' wealthiest towns are found in and around Boston, so it’s no surprise that this area will continue to grow and flourish as the real estate market takes off.
Boston Housing Supply
Currently, there is a 1.4-month housing supply in the Boston metropolitan area. This is down 0.86 months year-over-year and still on a downward trend. Much like national numbers showing a 1.1-month supply of homes, supply is low and demand is high. There aren’t enough homes for sale for the number of buyers looking, which causes home prices to escalate. Sellers will get more for their homes than they ever expected, and buyers will pay more to get into this sought-after city.
Buying a Rental Property in Boston
Like many big cities and popular tourist spots, the pandemic had a harsh effect on Boston. A long, cold winter and travel restrictions hurt the hospitality industry and rental market. Getting back to normal is proving to take a little more time.
Boston Rental Prices
Boston median rental price: $2,454
National average: $1,704
Rental prices were the highest they’ve been in recent years in March 2020. From there, the pandemic caused a dip in prices. However, they are on the rise once again. They are down 4.1% year-over-year but are now on an upward trend. National rental prices are up 3% year-over-year and have continued to increase even through the pandemic. Given the trend that Boston’s rentals were on before the pandemic hit, there is every reason to believe that prices will get back on track and rise even higher than before. For real estate investors, it means it’s a good time to move into the Boston metropolitan area and grab a promising rental investment.
Boston Rental Vacancies
Boston rental vacancy: 6.9%
National average: 6.8%
Rental vacancies in Boston are close to the national average. Nationally, rental vacancies are more steady, while Boston has always had a fluctuating rental market. Being a tourist spot and popular college town, rental vacancies here drop in certain months and then increase again. Right now vacancies are as high as they were during the peak of the pandemic. Rental prices have dropped because of the current oversupply. Vacancies in Boston have now plateaued and should see another decline soon, possibly causing a surge in prices. For investors looking to purchase a rental property in Boston, jumping into the market now means paying more for a property and then patiently riding it out until the rental market picks back up again. But if you get in right before college students return to in-person learning in the fall, you’ll probably do very well.
Boston foreclosure rate: 0.3%
National average: 0.3%
Nationally, foreclosures are at an all-time low. This is also true for Boston. Both have dropped 0.1% in the last year. With a housing supply shortage, more people and investors have been interested in purchasing foreclosures to redo or flip. This is great for the real estate market, as fewer homes are in distress and abandoned. For investors, it’s harder to find a good deal on a foreclosure, as the numbers are just so low and buyer competition is tougher than ever.
Fisher College at Beacon Street
The most expensive neighborhood in Boston is at Fisher College at Beacon Street. This area is more expensive than 99.4% of U.S. neighborhoods. Median home prices are more than $2 million, while rentals are almost $4,000. A historic area, residences here were built prior to 1939 and house a mixture of owners and renters. This urban neighborhood consists mainly of apartment buildings and high-rise complexes. About 10% of these homes are seasonally occupied, as college students are common here. In addition to college students, the population here is mostly made up of highly educated urban sophisticates. These wealthy city dwellers enjoy the walkability as well as the arts and theatre.
City Center/ Suffolk University
Another popular spot in Boston is City Center/Suffolk University. A wealthy coastal town, homes here are priced around $1.3 million and rentals go for around $5,000. These residences are mainly in apartment buildings or high-rise complexes and renter occupied. Most of the buildings were built between 1970 and 1999. The vacancy rate here is more than 20%, with nearly 12% seasonally occupied. Much of the workforce here is made up of executives and professionals with high-level jobs. Almost half of these professionals do not own a car and instead walk or take a train to work.
Readville and Stonybrook Village
A more affordable part of Boston is located in Readville and Stonybrook Village. Median home prices here are $471,218, and rentals are around $2,500. This is an urban neighborhood made up of mostly small to mid-sized single-family homes and smaller apartment buildings. Residences here are primarily owner-occupied. This well-established neighborhood has a vacancy rate of just 2.9%, meaning there is a high demand to live in this area. Small shops and corner stores are common in this neighborhood as well as cultural diversity. Jobs here range from executive to service jobs and clerical to manufacturing.
Boston Economic Condition
As a city that was hit hard by the pandemic, Boston is making its way back to normal. Unemployment numbers are going down. Employment opportunities are coming around, with help from businesses opening to full capacity, colleges ready for in-person learning and travelers ready to explore again.
Boston unemployment rate: 5.9%
National average: 6.1%
The unemployment rate in the Boston metropolitan area was low in March 2020 at just 2.9%. The rate skyrocketed during the pandemic to 15.6% and has since come down to a more normal rate. While the rate is still 3% up year-over-year, it is on the way down. The national average has done about the same, rising to 14.8% and dropping to 6.1%. Unemployment rates are still coming down, with more businesses opening back up and more job opportunities in sight.
Boston top Employers
Massachusetts General Hospital is the largest employer in Boston, with 11,400 employees. It is ranked as one of the top 5 hospitals in America. It has won numerous awards and offers far beyond just healthcare. Brigham and Women’s Hospital is another large employer, with 8,600 employees. Both of these hospitals are teaching hospitals associated with Harvard Medical School.
Fidelity Investments is headquartered in Boston and employs 8,000 people. It is one of the world’s largest financial firms and offers expert financial services to its customers as well as many benefits and programs to its employees.
Employing 7,400 people, Boston University is one of the largest private universities in the U.S. This university offers more than 300 programs, with a wide variety of courses and majors to choose from. It also offers 500 student clubs as well as support and resources for enrolled students and graduates.
The Bottom Line on the Boston Real Estate Market
The Boston-area real estate market is on its way back and may end up even better than ever. Households have increased, home prices are way up, and employment opportunities are bouncing back. The rental market will take a little longer to make its way back to normal because prices are lower, and vacancy is up, but overall it looks like Boston is headed for a successful recovery after a rocky year.