With inventory improving and mortgage rates once again bouncing along at record lows, plus a bevy of positive economic news in December, one might expect that 2015 will be a boom year for housing. But that optimism may be misplaced, as many potential buyers are being stymied by a new concern: decreasing affordability.
On a national level, prices remain more affordable than they were during the previous housing boom, and even in high-priced Boston, which weathered the crash better than most, home prices today remain about 6.2 percent below their pre-crash peak of the mid-2000s, according to a recent analysis from CoreLogic. But buyers concerned about affordability are beginning to rise; a recent survey by the online brokerage firm Redfin found that worries over whether they’ll be able to afford the house they want have overtaken concerns about tight inventory as buyers’ top anxiety in the current market. About a third of buyers named “affordability in the area they want to buy” their primary worry this fall, compared to just 11 percent most concerned with inventory.
“People are definitely worried about affordability. They bring it up a lot,” said James Gulden, a Redfin agent based in Boston.
Those concerns are easy to understand when you look at the data. While the median single-family home price in the Bay State was $330,000 through November 2014, according to data from The Warren Group, publisher of Banker & Tradesman, that’s up from $285,000 in 2009. And a closer look at town level data suggest that sales of lower-priced, entry-level homes are becoming scarce: While overall single-family home sales were down slightly through November, dipping 2.4 percent, sales of home under $300,000 were down more than three times as much, slipping 8.2 percent year over year.
In 2014, only 199 of the 371 geographical areas tracked by The Warren Group had the majority of their single-family homes sell for less than $300,000, compared to 212 in 2009. And the majority of those towns were concentrated in the far western part of the state or on the Cape, in places like East Longmeadow (88.1 percent), Dracut (71.4 percent), Hyannis (78 percent), and Yarmouth (68.3 percent) – too far from the Boston metro or job hubs in the 128 and 495 corridors for an easy commute.

Bidding Wars In Boston
Meanwhile, first-time buyers looking to stay in and around Boston – even those with incomes adequate to purchase homes well above $300,000 – are finding it difficult.
The renewed popularity of urban, walkable neighborhoods has been a boon to many parts of Boston and beyond. But that popularity among all age groups has pitted young first-time buyers against returning empty-nesters when bidding for homes in desirable enclaves like Jamaica Plain or Brookline. With returning baby boomers often able to make full-cash offers – having sold their own large, suburban homes – first-time buyers often lose out, said Gulden.
“It makes it a lot more difficult for first-time homebuyers trying to come up with a down payment,” said Gulden. “It’s often necessary for down payments to be 20 percent or more in a competitive market like Boston,” for a buyer to even get their foot in the door.
Those pressure are already pushing buyers out farther than they would like. Towns like Medford, Arlington and Dedham are now attracting the kind of buyers whose first preference might have been Cambridge, Somerville or Arlington, said Sam Schneiderman, principle of the Greater Boston Home Team and a buyer’s agent specialist.
“It’s a ripple effect,” he said. “The key is transportation. As long as there’s transportation, the towns work.”
“We try to match them between [desired] lifestyle and budget,” said Schneiderman. “But the bottom line is, not everybody’s going to be able to buy where they want to buy. People migrate to where they can afford.”