Learn more about the housing market in Massachusetts

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.  

In this article, we’ll cover everything you need to know about the Massachusetts housing market in 2024. 

Massachusetts Housing Market Overview 

Known for clam chowder, U.S. history, and several of the top universities in the country, Massachusetts is a notable destination for both tourists and homeowners. The state’s diverse economy rests on a mix of healthcare, education, and technology, plus tourism at the state’s many historical sites. 

From the housing market standpoint, Massachusetts boasts general economic stability, steady growth, and modest appreciation throughout the year. Its market is robust and active, generating consistent demand throughout the years. 

However, like many states, the housing market Massachusetts is currently in is struggling with low inventory. While there are some new listings, there aren’t enough homes available to meet buyer demand. Conditions are ripe for a competitive seller’s market: Low inventory, high demand, and high prices. And it’s not just single-family homes that are in demand. Condo prices in Massachusetts also rose about 7.8% year-over-year. Fewer homes are going up for sale due to seller apprehension high interest rates, leading to only 1.1 months’ supply of inventory in March of 2024. Typically, 5-6 months’ supply is required for a balanced market. 

Massachusetts’s current governor has made increasing inventory part of her agenda with this bill intended to spur development of homes and accessory dwelling units. However, prospective homebuyers and investors will be watching to see if more inventory becomes available towards the second half of the year. 

Massachusetts Housing Market Trends 

To understand the Massachusetts real estate market, it’s important to keep up with trends. Let’s look at some key ones in Massachusetts: 

Note: These statistics are based on Redfin’s monthly housing data from April 2024. 

Median Home Price 

The median sale price for homes in Massachusetts is $595,700, according to Redfin’s monthly housing data for April 2024. This represents a 9.9% increase in home prices compared to April of last year. Massachusetts is one of the U.S.’s most expensive markets, with median prices in Boston ($774,500) drastically higher than the state average. 

Number of Homes Sold in April 2024 

3,182 homes were sold in Massachusetts in April of 2024. This is a 2.1% increase from April last year, according to the Redfin data set. This metric gives us a good picture of the current sales volume in Massachusetts.  

However, keep in mind that this number might be inflated compared to other months since nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage. 

The current median days on market (DOM) in Massachusetts is 28 days. This means homes in Massachusetts sell in less than a month on average, indicating a competitive seller’s market. 

New Supply Statistics 

Limited inventory is a concern across the U.S. Housing supply in Massachusetts is increasing, although not as quickly as in other states. On average, there were about 2.84 new residential construction permits per 1,000 people in Massachusetts in 2021. Increased inventory could break up the seller’s market and supply more homes to meet heightened buyer demand. 

Property Tax Rate 

The average property tax rate in Massachusetts is 1.14%, according to Rocket Mortgage. This places Massachusetts’s average property tax rate as the 18th highest in the U.S. However, keep in mind that property taxes vary widely depending on the specific county of Massachusetts and the value of the home. 

Foreclosure Rate in Q1 of 2024 

In the first quarter of 2024, 1 in every 1,530 homes in Massachusetts experienced a foreclosure filing (according to recent data from ATTOM). Based on this data, Massachusetts’s foreclosure rate is about average compared to other states. 

Hottest Local Markets in Massachusetts 

Massachusetts has several resilient markets ideal for investors. 

1. Boston

Boston is a robust metro area, attracting business leaders, entrepreneurs, students, and other young professionals with a desire for urban living. As mentioned, the current average home price in Boston is nearly $775,000, while the median DOM for a Boston home is only 21 days. 

2. Worcester

Worcester is more affordable compared to Boston, but the city still has high demand for properties and substantial appreciation growth. The median home sale price in Worcester as of April 2024 is $430,500, and homes sell in an average of just 19 days. Redfin ranks Worcester as a ‘Very Competitive’ market for this reason.

3. Springfield

Springfield is even more affordable for first-time homeowners. As a smaller market, Springfield features less expensive homes, but still benefits from modern metropolitan amenities. The average home sale price here is $300,000, but competition here is just as steep with homes selling in an average of 21 days as of April 2024.

Economic Factors Impacting the Massachusetts Housing Market 

A holistic view of Massachusetts’s housing market requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below: 

Mortgage Rates 

High mortgage rates are a continuing challenge for would-be homeowners in the U.S. Massachusetts’s average rates for 30-year mortgages in June of 2024 are only slightly lower than the national average at 6.91%. Higher interest rates deter borrowing and discourage those who already own homes from putting their homes on the market. Many homeowners report feeling “locked in” to their current homes, as it is unlikely they will secure a mortgage rate as low as their current one on their next property. Prospective buyers in Massachusetts should monitor mortgage rates in the coming months for a better understanding of how they impact the housing market. 

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Massachusetts. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income. 

Population Changes and Demographics 

Job growth, unemployment, and migration patterns can each influence the housing market in a given area. Between March and May of this year, 9,000 people looked to move out of Massachusetts rather than stay within, likely in search of more affordable prices. In-migration can increase prices, while out-migration tends to ease strain on inventory. 

Massachusetts Housing Market Predictions 

The Massachusetts housing market is predicted to continue its growth trajectory throughout the remainder of the year. While unaffordability continues to be a problem for many would-be homeowners throughout the U.S., some markets in Massachusetts are seeing more affordability as new construction resumes after the pandemic and more homes become available. Buyers and investors alike will continue to wait for rate drops to facilitate a more welcoming market environment for new buyers. 

Likelihood of Massachusetts Housing Market Crash  

Experts do not currently see any signs of a market crash in Massachusetts. Demand for homes remains high in the state, and mortgage rates are forecasted to stabilize this year within the state’s robust economy, a sign of a strong and healthy market. 

Forecast for The U.S. Housing Market 

Now that we’ve looked at the housing market in Massachusetts, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’s current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

Massachusetts Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. 

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

This short summary leads directly into Massachusetts’s current rental market, with key trends below from Zillow. 

Massachusetts’s Rental Market Key Trends 

• Median rent: $3,200 

• Month-over-month rent change: $0 

• Year-over-year rent change: +$5 

• Available rentals: 24,581 

Conclusion 

The Massachusetts housing market in 2024 is marked by a blend of stability and growth, making it crucial for potential buyers and sellers to stay informed about market trends. Whether you’re looking to purchase a home soon or sell your property in Massachusetts, the macro- and micro- economic trends outlined above will affect your decision-making. Market dynamics like changes in home prices, inventory levels, and interest rates will continue to be critical for stakeholders in Massachusetts real estate.