Massachusetts homebuyers will continue to face price escalation, Realtor.com predicts.
The home listings website’s annual housing forecast predicts home prices in Greater Boston will grow 5.7 percent, while those in the Springfield area will rise 4.2 percent and those in and around Worcester will grow 4.5 percent compared to 2020.
At the same time, the report’s authors predict the number of homes sold in each of those three metros will grow in 2021 by 5.4 percent, 8.1 percent and 3.5 percent, respectively.
The biggest contributor will continue to be the record-low mortgage interest rates which have kept buyers pouring into housing markets in Massachusetts and nationwide by the millions this year. The Federal Reserve has signaled it intends to keep its benchmark interest rate low, which in turn will likely keep mortgage interest rates low.
The market will also have to contend with the “healthy” number of Millennials and Gen Zers entering prime first-time homebuying age, the report said. The widespread availability of a COVID-19 vaccine and the economic stability it will bring, the report added, will likely serve to further grow demand among all homebuyers.
At the same time, the Realtor.com researchers write, the declines in inventory that have made housing markets so competitive this year are expected to improve. This and other factors may help slow the pace of home sales somewhat, the authors write, but individual home sales will likely continue to be rapid affairs thanks to the residential real estate industry’s headlong rush to adopt technologies that enable buyers to do more online browsing and data-gathering about neighborhoods before they begin touring homes, speeding up their decision processes.
“We expect affordability to become a bigger challenge. It’s going to make [housing] more expensive,” Realtor.com Chief Economist Danielle Hale said in a statement. “[But] home prices will rise slower than this year, on the upper end of what we consider normal price growth.”
The National Association of Realtors’ October survey of its members market expectations found the median Realtor expects Massachusetts home prices to rise between 1 percent and 2 percent over the next three months on a year-over-year basis, while the median Realtor expects the state’s number of home sales to match or exceed last year’s totals over the next three months by no more than 1 percent on the same basis.
