During the second half of 2018 the volume of home sales in the Boston market began to slow and the number of homes for sale steadily increased. These two factors are signs of a market slowdown, which is a change of pace in a market that has, for several years now, been very hot with quick selling properties amid bidding and all-cash offers.
This change can be accredited to tax changes at the federal level (caps on deductions for state and local real estate taxes), and the overall uncertainty of what the mortgage market might bring.
A potential larger factor is due to the age-old axiom: “What goes up must come down”. The party for the brokers, developers and sellers could not last forever. Home sales in the Boston area will likely continue to slow throughout the 2019 year, with a concomitant decline in prices.
This year we will see the Boston rental market will heat up, a side effect of the cooling sales market. Currently the Boston area is already one of the most expensive areas in the country to rent a home. In 2019, more people who would have bought will rent instead as they wait for prices to decline that much more—and that will make the rental market that much tighter and incentivize landlords to raise rents that much higher.
Unfortunately, the pace of apartment construction will do little to alleviate this. There is simply not enough supply in the pipeline to overtake rental demand at this point.
Big site sales. There are several prime development sites up for sale in the Boston area. These include the 20-acre Bayside Expo Center site just east of the Red Line’s JFK/UMass stop in Dorchester and an 18-acre municipal tow lot and storage site between that neighborhood and South Boston. There are also smaller ones for sale such as Procter & Gamble’s 6.5-acre section of a parking lot between A Street and the Fort Point Channel and several sites around Roxbury’s Dudley Square area. Look for these and others to trade in 2019, and to in turn lead to a wave of development proposals in a city and region starved for new housing.
Construction everywhere. With the combination of demand for housing, more residents/workers and high profile plans – there is projected forecast of sustained and serious development over the next year.
The region is already no stranger to construction sites and to battles over building. Through 2019 we will see that much more, perhaps at a higher pitch than usual as several towns and cities have committed to facilitating the construction of tens of thousands of more housing units in the next 10 years. This includes areas not necessarily receptive to new development—and the City of Boston is developing a new master plan for its downtown. Stay tuned!
Source : Acitelli, Tom. “Boston Real Estate Predictions for 2019: Slower Sales, Higher Rents, and Development Galore.” Curbed Boston, Curbed Boston, 12 Dec. 2018, boston.curbed.com/2018/12/12/18137948/boston-real-estate-predictions-2019.
