The State of the Boston Real Estate Market
Boston was founded nearly four centuries ago, but it remains a dynamic city. It didn’t experience the same depopulation as many Rust Belt cities, and it has attracted ongoing redevelopment. Yet the housing market remains expensive due to factors ranging from geography to age. Let’s look at the current state of the Boston real estate market.
How Expensive Is Boston Real Estate?
Boston ranks in the top 10 most expensive real estate markets in the United States. It always comes in after New York and San Francisco. Honolulu, Hawaii rivals it in cost but often surpasses it, especially in affordability rankings. Boston is a large metro area. It is home to roughly four million people and 80 percent of the population of Massachusetts. This means homes range in price from 300K to 2.3 million dollars. You can, of course, find luxury penthouses and waterfront properties for much more. However, the median home price is between 500,000 and 600,000 dollars. In a few neighborhoods, you can find a single family home for 300,000 to 500,000 dollars; that isn’t much higher than the 220,000 dollar median home price for the entire United States.
Where Boston Ranks in Housing Affordability
One list that ranks cities by income inequality based on the Gini Coefficient are topped by cities like Atlanta, Philadelphia, New York, Washington DC, Chicago, and Boston. When the metro area is taken into account, New York, Miami and Los Angeles are the most unaffordable real estate markets, while Boston comes in eighth. This makes Boston a relatively expensive housing market, but it is more affordable than New York and DC because of the much higher median income relative to housing prices. This is why a surprising number of firms are relocating from NYC, DC and San Francisco to Boston or simply expanding in the area.
Why Does Boston Have a Stable Real Estate Market?
Downtown Boston has always had dense development. The walkable, bike-able communities served by public transit are ideal for Millennials who want to live in interconnected communities that don’t require a car to get from point A to point B. The city enjoys a relatively young population, as well, thanks to the world-class universities that attract students to the area. The low unemployment rate combined with high average incomes help the city to retain these young adults. There is still movement between the downtown areas full of childless young adults and empty nesters and the single family homes and larger condos found in the suburbs. Young families often move to the Jamaica Plain real estate market and similar neighborhoods within commuting distance of downtown Boston instead of fleeing the area.
Boston remains a stable real estate market in part due to its dynamic job market. Unemployment hovers around 3 percent. More importantly, the Boston metro area is attracting high tech and biotech firms that want to be close to East Coast markets, the Harvard and MIT campuses and multiple world-class hospitals. The availability of high paying jobs attracts many people to the area for work, but the overall job market isn’t experiencing such a boom that real estate prices are going up far faster than local salaries. This is why Boston real estate appreciated by less than one percent in 2019 and may only go up that much in 2020.