Boston’s toniest suburbs have enjoyed a remarkable run-up in home prices over the last decade, defying even the Great Recession.
The median price of a home has approached or even surpassed $1 million in a number of uber-affluent towns, thrusting them onto all those ubiquitous lists of the most expensive places to live in the country.
But as we head into 2016, this record run-up is finally showing signs of topping out.
After years of steep increases, home prices were flat or even slipped into negative territory in a number of the most expensive suburbs in 2015, including Wellesley, Weston and Lincoln.
So if you were wondering, there actually are price points beyond which some buyers fear to tread, whatever their desire for the social status of a prestigious ZIP code and the perks of living life in a picture-perfect town with elite schools.
“The price of entry had gone up so much in these top tier towns that people are forced to go elsewhere,” noted Norman Holbrook, a Coldwell Banker broker in Westwood.
Peaking Prices
Scott Van Voorhis
A quick look around suburban Boston provides ample evidence of how prices in some of the priciest towns have simply gotten too rich for their own good.
The western suburbs, where home prices are the highest in Massachusetts, saw the biggest momentum shift in 2015.
Prices fell or were essentially flat in Lexington, Concord, Carlisle, Lincoln, Sherborn, Weston, Wellesley, Sudbury and Belmont in 2015 through the end of November, according to The Warren Group, publisher of Banker & Tradesman.
All had seen steep increases over the past five years after the worst of the Great Recession had passed, only to hit a wall last year.
Lincoln’s median price dropped below the $1 million mark for the first time since 2012, falling to $945,000 after a 7 percent hit.
Lexington and Concord both entered the year with their medians well over $900,000 only to see their first declines in five years, with Concord sliding back to $879,500.
Weston ($1.3 million), Sudbury ($680,500) and Sherborn ($743,452) all saw prices edge down.
And after racking up double-digit gains since 2010, both Wellesley ($1.2 million) and Belmont ($900,500), saw prices post small increases in 2015.
Some of the most coveted suburbs on the South and North shores and out on 495 also saw prices peak in 2015.
Cohasset saw a 2.8 percent drop, to $743,500, while Winchester saw its median rise a modest $5,000, to $910,000. Out on 495, Southborough, a favorite among tech executives, saw a nearly $60,000 drop, or a hefty 9.7 percent, pushing its median price to $540,000. That’s a median price not seen in town since 2010.
Buyers Maxed Out
The declines might seem odd at first glance, what with the Greater Boston economy in high gear and more highly paid professionals on the hunt for homes than available listings.
But prices have risen to such unsustainable heights in the top tier towns that it is forcing some buyers to look at alternatives, more often than not neighboring burbs with more reasonable prices.
Elaine Bannigan, broker owner of Pinnacle Residential Properties in Wellesley, notes the tipping point for buyers looking at Wellesley is $1.5 million.
The number of unsold homes above that mark is piling up, with a 40 percent dive in 2015 in sales of homes over $3 million, said Bannigan, author of the Pinnacle Report, which tracks prices in the western suburbs.
An increasing number of buyers are looking at Needham, where they can get the same house for 20 percent less, and with a larger yard as well, she said.
Coincidentally or not, Needham’s median home price rose a healthy 4.3 percent in 2015, to $840,000.
Natick has also emerged as another refuge for priced-out buyers, with the town’s increased popularity driving its median price up more than 11 percent, to $528,000.
Holbrook, the Coldwell Banker broker, recalls a recent open house in Natick jammed with buyers who had given up looking in the more expensive towns, such as next-door Wellesley.
“They wanted a yard, they wanted a larger house, they wanted something new and a lot of those expensive towns, they were just priced out of,” he said.
Holbrook sees a similar phenomenon taking place to the north of Boston, with buyers checking out Medford and Arlington after being priced out of Winchester. Medford’s median rose 7 percent, to $450,500.
Still, it’s not just crazy prices that may be turning some buyers off of the most expensive suburbs.
Towns like Wellesley or Winchester have loads of beautiful old homes, but other than teardowns, there’s little new construction to choose from.
And right now, buyers want brand spanking new, not old. In fact, new construction is one the few segments of the market where prices are still rising rapidly and show no signs of tapering off, Bannigan noted.
Towns like Wellesley and Weston, Concord and Cohasset, have long been considered the equivalent of blue chip stocks, ever increasing in value.
But right now it looks like a sell-off is brewing.
