Note: Our market forecast includes Boston data and data from its surroundings, including Cambridge and Newton.
Boston is the capital of Massachusetts and the largest city in New England, spanning about 48 square miles. It's home to nearly 693,000 people and also serves as a destination for more than 22 million tourists each year. The city was founded by the Puritans in 1630, though the region itself dates back thousands of years to when the Native Americans first live there.
Affectionately called Beantown -- the moniker refers to the early settlers' affinity for beans -- Boston has achieved many important milestones in U.S. history, including the country's first subway system (known as the T), first public school, and first public library. Today, in the realm of business and industry, Boston is known for its "eds and meds." The city has some of the best hospitals and healthcare facilities in the world, along with dozens of top-notch educational institutions.
Boston's many neighborhoods offer a rich mix of real estate opportunities, from stately brownstones in Beacon Hill to triple-deckers in Dorchester to sleek new luxury condos in the Seaport District.
If you're thinking about investing in the Boston real estate market, here are some factors to consider.
The state of the market
Like many other major cities, Boston's real estate market has been hit hard by the pandemic. The downtown area especially saw a massive exodus of residents, who left apartments vacant in search of more space during the lockdown. The once-vibrant college campuses in and around the city were quiet and subdued as students were sent home to complete their studies remotely last March. As the vaccine continues its rollout, campuses are expecting to be full again this fall, which bodes well for investors in the student housing sector.
Here are some real estate trends of note:
- Housing is in short supply: Demand is high and inventory is low in Boston's real estate scene. When homes do come onto the market, bidding wars usually ensue for those who can afford to get into the fray. This is particularly discouraging for first-time homebuyers who will likely have to wait for the market to cool off or expand their search farther outside of the city.
- The median price of houses is high: It's expensive to buy a home in Boston. The country's average median home price is $330,000, but in Boston, it's hovering around $557,000. It will be hard for investors to find any bargains in such a hot real estate market, and homeowners lured by low interest rates might find their budget stretched to the max. That said, if you already own property, now might be the time to cash in.
- The rental market is on the rebound: Even with a drop in rent, Boston's median rent is much higher than that of the general market. Boston is a huge college town, which meant there was a massive exodus of students during the pandemic. Most students continued their studies either remotely or in a hybrid fashion, depending on their campus. Things are definitely looking up for the fall 2021 semester, though, so campuses -- as well as landlords -- are looking forward to welcoming back students.
Boston housing demand indicators
All data and charts supplied by Housing Tides by EnergyLogic.
Home prices have risen in Boston due to the low supply and high demand, good news for current property owners. On the flip side, rents have fallen and vacancies have increased, bad news for rental investors. However, in towns near large campuses, vacancies will get filled up once again when more students return in-person instruction as anticipated this fall.
For the past several years, the unemployment rate in the Boston area had been below the national average. That all changed in 2020 because of the pandemic. Like in many other metro areas, the Boston unemployment rate increased, and for much of the lockdown, the area's jobless rate was higher than the national average. Boston's unemployment rate currently stands at 6.8%, for a 3.8% increase year over year, but this will hopefully improve now that businesses are opening back up and more people are returning to work.