Whenever there is uncertainty in the economy, real estate agents are asked for their predictions on the housing market. While past performance is never a guarantee of future performance, it can provide powerful insight into how a local market performs during times of turmoil.
If history is any indicator, expect prices to remain strong in 2023. Boston is a global city with a diverse economy and high demand for housing. There are several reasons why Boston properties are expected to retain their value.
First, the strict lending requirements of the past decade have reduced the risk of foreclosure or short sale. Second, record low interest rates have kept payments affordable. Last, home values have appreciated significantly, providing high equity for the majority of property owners. These are the differentiating factors between 2008 and today’s economic climate.
Today, sellers are well positioned for an economic downturn. Sellers do not have an urgency to sell. If anything, they have more incentive to stay in their existing property due to affordability, compared to the cost of buying a new property at today’s pricing and higher rates.
Furthermore, rents have skyrocketed. With such low mortgage payments, owners are more inclined to rent out their property at a high monthly profit, rather than sell at an unnecessary discount. Property owners are essentially sitting on great cash flowing investment properties. Sellers have financial options available to them to avoid selling at a drastic reduction of market value. This will keep prices stable.
There is no denying that rising interest rates have slowed the housing market. Inventory has increased. However, more inventory was desperately needed. This change in the market is less a “correction” and more a “normalization” to a balanced market.
This is what makes it an ideal time for buyers to buy. Savvy buyers know how to find a deal. They have been taking advantage of this new market with increased inventory to bid on properties, non-compete. This has allowed buyers to bid under-asking and to avoid waiving contingencies, as opposed to bidding wars and risky measures to get an offer accepted.
Even with the rising interest rates, demand for housing has remained high.
Buyers are learning to adjust to the new interest rates and have already begun returning to the market. The demand to purchase in Boston still remains high, with relatively low inventory. Prices in Boston will remain strong in 2023 as a result.
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About the Author: Ryan J. Glass is a Vice President at Gibson Sotheby’s International Realty. He is regularly a top producer and has consecutively ranked in the top 1.5% of all 1.6 million real estate agents nationwide.
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