Have skyrocketing home prices pushed Boston-area buyers to the breaking point?

Buying News
A view of Boston skyline.
Condo sales in Suffolk County (which includes Boston, Chelsea, Revere, and Winthrop) were up 136.3 percent over May 2020, with the median price increasing 11.2 percent to $699,000. David L Ryan/Globe Staff file

The median price of a Massachusetts single-family home hit a new record of $525,000 in May, according to The Warren Group, a real estate analytics firm. That marks a 23.5 percent jump from a year ago and a 28 percent increase over May 2019.

And while the 5,139 Massachusetts single-family homes sold in May marked a 28.1 percent increase from a year ago, comparing the tail end of a global pandemic with its frightening first months isn’t particularly useful. “One of the things we’re cautious about is making comparisons with last year, especially with the second quarter — it was terrible,” said Warren Group chief executive Tim Warren.

Contrasted with the relatively healthy real estate market of May 2019, single-family sales were down 9.7 percent in Massachusetts last month. “You have to go all the way back to 2015 to find May sales that low — that really stood out to me,” he said.

Buyers may have finally been pushed past their breaking point, Warren said. “You have to wonder, with prices rising so rapidly, whether there are enough people with enough income to keep paying these prices,” he said. “[Year to date], prices are up 18 percent over last year. Last year, they were up 11 percent over the prior year. People aren’t getting those kinds of raises.”

Warren expressed slight concern over the lower sales volume. “The two big crashes we’ve had, in both cases, the number of sales had fallen and then prices started to fall the following year,” he said. However, he was quick to note, “It’s just one month, and we’re still disrupted by the pandemic.”

Indeed, even if sky-high prices and stressful bidding wars have some buyers backing away, the bigger hindrance to higher sales volume seems to be a shortage of housing inventory.

There were just 3,831 single-family homes for sale statewide at the end of May, according to a separate report from the Massachusetts Association of Realtors. That represents a 63.7 percent plunge over May 2020’s 10,531 listings — a time when many fearful sellers were actively pulling their homes off the market. In May 2019, there were 13,961 homes for sale — which itself was a drop from May 2018, when there were 15,282 active single-family home listings across Massachusetts.

That’s right: While few would classify the spring of 2018 as a buyer’s market, there were roughly four times as many houses for sale in Massachusetts that May compared with last month. Though 6,363 new single-family listings hit the market in May, according to the MAR report, they sold in roughly half the time as they did a year ago, and for an average of 105 percent over the asking price.

While condominiums had been a little easier to come by during the pandemic, the number of units for sale statewide in May hit its lowest point since MAR began recording inventory data in 2004. That didn’t seem to slow down sales, however.

There were 2,723 condos sold statewide in May, according to the Warren Group, a whopping 94.6 percent increase over a year ago, when buyers were shying away from shared spaces and downtown living. But even against May 2019, condo sales were up 6.5 percent. And median condo prices climbed 20.8 percent over a year ago, from $405,500 to $490,000.

“It seems to me that urban living will gain ground in a post-pandemic world,” Warren said, with downsizing baby boomers and millennial first-time buyers both viewing condos as an attractive, more affordable option. “The only thing that might derail a fully enthusiastic embrace of condos might be remote work.”

Condo sales in Suffolk County (which includes Boston, Chelsea, Revere, and Winthrop) were up 136.3 percent over May 2020, with the median price increasing 11.2 percent to $699,000. In Cambridge, where sales were up 144.7 percent over last year, the median price of a condo rose 13.5 percent versus May 2020, to $840,000. (See town by town data here.)

Farther from Boston, single-family prices continue to surge. At $575,000, the median price of a single-family house on Cape Cod has risen an astonishing $150,000 in just a year — up 35.3 percent in Barnstable County, from $424,900 in May 2020. Single-family prices in Berkshire County rose 32.8 percent, meanwhile, from $192,000 a year ago to $255,000 in May. (See county by county data here.)

Subscribe to the Globe’s free real estate newsletter — our weekly digest on buying, selling, and design — at Follow us on FacebookLinkedInInstagram, and Twitter @globehomes.