Here’s How the Greater Boston Housing Market Fared in May 2023

What do we need? More housing. When did we need it? Yesterday.

may market update

Photo via Photo via Getty Images/Peter Dazeley

Few topics can set off a maelstrom of debate like the discussion around building more housing. Just go to any community’s Planning and Zoning meeting and you’ll see how controversial the subject is in some circles. But the situation in Massachusetts is getting so dire that real estate professionals are now joining sides and saying we, as a state, need to build more housing to realign our fraught real estate market.

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May saw another month of declining home sales in Massachusetts, continuing a trend that’s been going on for nearly two years. According to the Massachusetts Association of Realtors (MAR), statewide closed sales were down by 22 percent for single-family homes and condos since last May. In total, there were only 3,319 single-families and 1,654 condos closed on for the month. At the same time, new listings are going down compared to last year while prices continue to go up (but barely). The culprit is a sluggish post-Covid market exacerbated by the fact that Massachusetts has not kept up with the demand for housing here.

“With such low inventory, it’s hard to produce an increase in the volume of sales,” says 2023 President of MAR and Keller Williams broker David McCarthy. “We definitely need to build more housing.”

But it’s not enough to simply build more McMansions: What Massachusetts is lacking is “workforce housing,” as McCarthy says, by which he means homes that people earning an average income can afford so they can live in the communities where they work. “That’s not what we’ve historically been building,” he adds.

Of course, the entire solution is not so simple as building more three-bedroom homes. People are used to mortgage interest rates in the twos and threes from what they saw in 2020, so today’s 6-to-7 percent rate seems high. Alternatively, if you bought in 2020 at a lower rate, you’re not going to be jumping to double that now with a new purchase unless you really, really need to move, McCarthy says, resulting in a tight inventory and a market unlike most have ever seen.

However, the Federal Reserve recently took a break on interest rate hikes to battle inflation. While these hikes will not directly affect mortgage rates, CEO of Gibson Sotheby’s International Realty Colleen Barry says if inflation comes down a bit, mortgage rates may also fall. While we may not see Covid-era numbers, she hopes this cooldown will maybe inspire more people to consider moving again.

“We are still seeing quite a bit of activity,” Barry says. “It’s just not a lot compared to what we saw a couple years ago.”