iStock illustration
While home values continue to tick upward the upward march of price increases could be reaching a breaking point, researchers at Zillow suggest.
According to an index Zillow economists use to track home values, Greater Boston home values saw comparable growth to the rest of the country in July, with a Zillow Home Value Index increase of 0.5 percent month-over-month. Fellow New England metros Hartford and Providence saw larger growth (0.9 percent and 1 percent respectively), some of the highest across the United States.
Year-over-year, the same index’s seasonally-adjusted reading for Greater Boston was up 7.4 percent in July, 8.2 percent in June, 9 percent in May and 9.2 percent in April.
The country as a whole saw an increase of 0.3 percent month-over-month while metros such as Seattle, San Francisco and Washington, D.C. saw decreases in home values. New York City saw a similar increase to the New England metros with 1 percent growth.
Homes are staying on the market longer, albeit by very slim margins. Redfin reported that in July of 2024, homes stayed on the Greater Boston market for a median of 19 days. This is a single-day increase from the previous month and equal to July of 2023.
Still this relief from increasing costs could only last for a short time as experts believe the Federal Reserve’s promised benchmark interest rate cuts could bring back fierce competition in the homebuying process.
“If this relief from mortgage rates continues, we should see more buyers restarting their hunt for a home,” Zillow Chief Economist Skylar Olsen said in a statement. “But although rate lock among homeowners is easing, they probably won’t be as motivated to jump back into the market and sell. With housing inventory still scarce, this improved affordability picture could reignite competition and sales as we head into the fall, or at least delay the usual post-summer cooldown.”
If competition does increase, the prices of homes will continue to rise only increasing the lack of affordability for prospective homebuyers.
“With the Fed potentially dropping interest rates, which we know is not obviously a direct correlation to the mortgage interest rate market, but we know that it tends to have an effect that kind of cascades, and we will see the mortgage interest rates drop,” said Colleen Barry, CEO of Boston-based residential brokerage Gibson Sotheby’s International Realty. “When that happens, more people are going to enter the marketplace so we are likely to see actually demand increase.”
