Reflecting on 2024, we recognize it as a year of significant developments. As we enter the New Year, change is imminent. To anticipate future trends, we must first analyze past data. On Instagram, I regularly provide market recaps for three or four neighborhoods weekly, offering sellers and buyers monthly market performance insights. I’ve compiled a year-in-review for all the neighborhoods featured in my Instagram posts. This comprehensive overview aims to provide sellers, buyers, and investors with a deeper understanding of the 2024 market and projections for 2025. I hope Back Bay Market Analysis helps anyone. If you’re considering listing your home for sale or rent, or if you’re a buyer ready to re-enter the market after sitting on the sidelines in 2024, I’m available for a private consultation and will create a custom market analysis. Let’s begin with Back Bay.
Back Bay Market Analysis
When assembling this Back Bay Market Analysis, I compared sales data from 2023 to 2024 to identify market changes. In 2024, properties generally remained on the market longer, except during the second quarter, where the average days on the market (DOM) decreased by six days compared to 2023. Interestingly, despite shorter DOM, average list and sale prices were higher in 2024.
Second Quarter Condo Sales
– 2023:
– Average List Price: $1,816,033
– Average Sale Price: $1,716,480
– DOM: 70 days
– 2024:
– Average List Price: $2,165,331
– Average Sale Price: $2,116,155
– DOM: 64 days
In other quarters, Back Bay condos experienced longer market times and price reductions in 2024.
First Quarter Comparison
– 2023:
– List Price: $3,738,419
– Sales Price: $3,488,054
– 2024:
– List Price: $2,993,462
– Sales Price: $2,896,937
The average list price decreased by 25% in 2024, and the average sale price declined by 20%. In early 2023, interest rates stabilized around 6%, likely boosting buyer confidence and supporting higher home prices. In contrast, in 2024, rates neared 7% with increased volatility, potentially dampening buyer enthusiasm—notably, four homes sold above the asking price during the first quarter of 2024.
The second quarter of 2024 showed improved sales figures. As mentioned, it was the only quarter with increased list and sale prices. This period typically attracts the highest number of buyers. Interest rates averaged 7.17% in April, slightly decreasing to 6.86% by June 2024.
Second Quarter Comparison
– 2023:
– List Price: $1,816,033
– Sales Price: $1,716,480
– 2024:
– List Price: $2,165,331
– Sales Price: $2,116,155
In 2024, 115 units closed between April and June, compared to 102 units in the same period of 2023. The increased inventory in 2024 may have appealed to buyers, even with higher interest rates. List prices rose by 16% and sale prices by 23%. Notably, 20 homes sold above asking in 2024. Properties requiring minimal work priced under $800,000 moved quickly while higher-priced listings lingered.
The third quarter of 2024 experienced the most significant price declines: list prices dropped 32%, and sale prices fell 25%.
Third Quarter Comparison
– 2023:
– List Price: $2,603,980
– Sales Price: $2,545,086
– 2024:
– List Price: $1,977,829
– Sales Price: $1,904,124
Properties stayed on the market longer, yet 11 condos sold above asking. Accurate pricing and meeting buyer expectations remained crucial. During this time, inflation affected many buyers, reducing discretionary spending and complicating down payment savings. Unstable energy costs, including gas prices, increased living expenses, prompting some buyers to consider renting instead. Additionally, the upcoming election influenced market sentiment. Interest rates began the quarter at 6.95% for a 30-year fixed-rate mortgage, dropping to 6.08% by September. Despite a 50 basis point reduction in the federal funds rate in September, buyer confidence remained low, possibly due to earlier rate adjustments and a corrected job market report in August.
In the fourth quarter, average list prices rose from the previous quarter, aligning with average sale prices. Properties had the most extended market times in 2024, averaging 75 days, with 13 homes selling above asking. The average list price decreased by 22%, and the average sale price by 20%.
Fourth Quarter Comparison
– 2023:
– List Price: $3,008,647
– Sales Price: $2,545,086
– 2024:
– List Price: $2,421,582
– Sales Price: $2,311,076
In November, reports indicated that renting in Boston had become more cost-effective than purchasing a home. Before discussing rentals, let’s consider the National Association of Realtors Chief Economist Lawrence Yun’s predictions for 2025:
– A 9% increase in existing home sales, totaling approximately 4.5 million transactions.
– A 2% rise in median existing home prices.
– Mortgage rates stabilizing around 6%, enhancing buyer confidence.
– An anticipated nationwide inventory increase due to new construction and more homeowners listing properties, easing the long-standing shortage. However, Boston may continue to experience elevated prices due to insufficient inventory to meet demand. Buyers will face higher costs until zoning laws are reformed to facilitate building.
– Economic growth with the addition of 2 million jobs, boosting consumer confidence.
– A more balanced real estate market in 2025.
Back Bay Rental Market Analysis
As an investor, you’re likely familiar with 2024’s performance. However, if you’re curious about the Back Bay rental market, here’s an overview:
In 2024, Boston publications reported declining rents, but the specifics varied. Studio apartments experienced annual rent increases, while one-, two-, and three-bedroom units saw declines. Notably, three-bedroom units had two quarters with median rent increases. The fourth quarter registered the steepest declines across all apartment sizes. May and July recorded the highest rentals above the asking price, though such occurrences happened throughout the year. By year’s end, 70 rentals exceeded asking prices, 481 met asking prices, and few fell below. So, while rents declined slightly from 2023, they remained relatively high.
Many predict that rents will stay elevated in 2025. Although some residents are leaving Massachusetts due to high living costs, an influx of newcomers is sustaining rent levels. While rents may not reach their 2022 peak, landlords can anticipate modest gains.
Overall Sales Outlook
Many economists believe the challenges of 2024 are behind us, a sentiment I share to some extent. The incoming administration favors less regulation, prompting businesses to relocate operations domestically. Financial markets have gained confidence with a president who understands finance. It’s too early to determine if Trump will implement all aspects of his agenda. Nonetheless, the new administration is expected to bring confidence and stability, likely controlling inflation to benefit consumers across all economic sectors.
If you have questions about the sales or rental market, please contact me. For more market insights, follow me on Instagram, where I regularly post content to help buyers, sellers, and renters navigate the real estate market.
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