Amid the return of uncertain economic times, and a potential recession just around a corner or two, the housing market in Boston’s toniest suburbs appears to be bouncing back faster than more middle-class communities.
There is the Massachusetts real estate market and then there are the well-off suburbs like Wellesley, Brookline and Concord, where the median home price long ago crossed the seven-figure mark.
And let’s just say, they are definitely two very different animals.
Real estate market across the state, including Greater Boston’s, took a significant hit in the late 2000s and early 2010s in the wake of the Great Recession and the collapse of the home price bubble.
Foreclosures soared in both urban neighborhoods and middle-class towns, while prices fell as buyers became more cautious amid layoffs and economic uncertainty.
The hangover from the recession, the Wall Street crash and the implosion of home prices dragged on into the early 2010s, with home sales and residential construction both suffering.
Yet in the priciest suburbs like Wellesley, though price increases may have slowed for a year or two there was no significant drop-off, as there was in so many other communities.
And by the early 2010s, home prices in places like Weston, Brookline, Belmont, Newton, Dover, Concord, Lexington, Winchester and Hingham were already headed to new, record levels.
Most of these towns saw their median home prices cross the $1 million several years ago.
In fact, not only is that old news, two suburbs have crossed the $2 million mark, namely Brookline, where the median price now tops $2.4 million, or Weston, where it is now $2.2 million, up from $1.9 million in 2021, according to The Warren Group, publisher of this newspaper.
Now, amid the return of uncertain economic times, and a potential recession just around a corner or two, it’s fair to ask whether real estate history is about to repeat itself.
Worst Is Over for Wellesley
The the once-hot Massachusetts real estate market has cooled off, and cooled off fast, including sales in the previously too-hot-to-handle Boston area.
Home sales fell 15 percent across Massachusetts in 2022, with any number of towns seeing even steeper declines.
If present trends continue, the next shoe – asking price reductions and median sale price declines – are sure to set in as we head deeper into 2023.
Yet while the real estate market in much of the state is bracing for tougher times, towns and cities like Wellesley, Belmont, and Newton are likely to be well-insulated from the turmoil.
Income levels are well above the state average, while there appears to no shortage of buyers attracted by top-notch schools or the status that comes with living in a high-end suburb with lots of cachet.
A case in point is Wellesley, a market that Elaine Bannigan, founder and former owner of Pinnacle Residential Properties, has been tracking for more than two decades and where there are already signs of a rebound.
Bannigan, who recently decided to affiliate with Douglas Elliman Real Estate, recently issued her latest Pinnacle Report on the local housing market.
There was a dramatic drop off in activity in the Wellesley real estate market between the spring 2022 market and the final quarter of the year.
The median sales price of a single-family home in town plunged 24 percent from spring to the fall, while the number of transactions plunged by half.
The listing to sale price, which stood at a sky-high 109 percent in the spring, dropped back to 98 percent in the last three months of the year.
Overall, homes in Wellesley took three times longer to sell at the end of the year than they did last spring.
Listings Still Missing
Yet there are now signs that, at least in Wellesley, the worst may be over.
After surging over the fall, mortgage rates ticked back a bit in January.
And with the spring market right around the corner, buyers are out in force again in Wellesley.
Scott Van Voorhis
In fact, one colonial, on the market for $1.5 million, recently fielded 17 different offers.
The biggest problem facing her agents right now is the same one they have been struggling with for the past few years – a dire shortage of homes to show and sell.
Except for some luxury condominiums, there is little new housing coming on the market in Wellesley, while Baby Boomers remain stuck in larger homes with more space than they need, unable to find a decent alternative for their retirement years.
“I am not sure how prices are going to shake out this year,” Bannigan said. “The demand is so high. If you are a seller, now is the time to sell.”
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
