The surprisingly scorching real estate market of 2020 finished the year on a high note, with a record-setting December.
Massachusetts recorded 6,410 single-family home sales last month, according to real estate analytics firm The Warren Group — that’s the most ever recorded in December and a 28.6 percent increase from December 2019. The median price of a single-family home sold last month surged 14.4 percent year over year, to $455,000, an all-time high for the month.
The 2,545 condo sales recorded statewide in December marked a 20.6 percent increase from a year ago, and the median price of a condo rose 8 percent, to $410,000 — also a record for this time of year.
That big finish gave one last boost to what was already an astounding year in real estate. Despite a titanic plunge in sales activity during the early stages of the pandemic last spring, single-family sales bounced back — notching year-over-year gains of 27 percent or more every month since September, according to Warren Group chief executive Tim Warren.
“I remember arguing with realtors and appraisers who were telling me that everything was going to be fine,” Warren said, recalling last spring. “If you told me back then that by the end of the year the total number of sales would surpass 2019, there’s no way I would have believed you.” Yet there were 61,469 single-family home sales in 2020 compared with 59,178 the year before, a 3.9 percent increase for the year.
Even as parts of the economy collapsed and unemployment soared, demand for what is still a limited supply of homes for sale — along with tantalizingly low mortgage rates — pushed prices upward across Massachusetts. Single-family home prices climbed 11.4 percent for the year, to a median of $445,500. Year-end condo prices climbed 9 percent over 2019, to $415,000, though the total number of condo sales dipped 1.4 percent for the year.
“It seems the more time people spend at home, the more they want to spend on their home,” Warren said. “And they’re spending it by fixing up the homes that they have, by buying a second home, or thinking about a different home as their primary home.”
Indeed, traditional vacation home communities saw some of the largest leaps in 2020, as claustrophobic homeowners sought refuge near the beach or mountains. The Massachusetts counties that saw the highest uptick in home sales were Barnstable, Berkshire, Nantucket, and Dukes (Martha’s Vineyard). (View The Warren Group’s county-by-county data.)
Prices followed suit. Single-family sales on Nantucket were up an astonishing 71.2 percent in 2020, and median prices rose 34.2 percent on the year, topping $2 million. In the Berkshires, the median price of a single-family rose more than 28 percent in both Stockbridge and Lenox, while Great Barrington saw a 30.8 percent jump, from $325,000 in 2019 to $425,000 in 2020.
Meanwhile, the slowest markets were also among the most densely populated: Single-family sales dropped in Suffolk and Essex counties, by 8 percent and 1.2 percent, respectively, though prices still climbed by 9 percent and 13.3 percent. Condo sales were also off for the year in Suffolk (-6.6 percent) and Middlesex (-2.6 percent) counties, and the median price of a condo in Suffolk County (spanning Boston, Chelsea, Revere, and Winthrop) rose a modest 3.6 percent, to $639,000.
Many of Boston’s neighborhoods and inner-ring suburbs saw restrained price growth as well. The median price of a single-family home rose more slowly than the state average in Arlington, Braintree, Brookline, Chelsea, Medford, Milton, Newton, Quincy, and Revere, according to Warren Group data. In Boston, only Charlestown and Hyde Park eclipsed the 11.4 percent statewide benchmark. Prices in Watertown fell by 2.8 percent compared with 2019.
“I don’t think it indicates that people are moving out of those areas so much as it indicates people who are in those areas are considering a safe house — someplace else they can go,” Warren said. “If we can’t go to Paris this year, let’s buy a place in the Berkshires or in Truro instead.”
(View The Warren Group’s town-by-town data.)
Warren says the strength of the stock market, as manifested in people’s retirement accounts, likely boosted buyer confidence, as have record-low mortgage rates. “That supports a higher price on a home, and we now have some degree of confidence that the Federal Reserve and Biden administration intend to keep rates low,” he said. “If mortgage rates jumped to 10 percent in two years, that would have a negative impact on the value of the home you bought this year. But if interest rates stay low, that risk has been taken out of the equation.”
Meanwhile, other parts of the economy are still in a state of COVID collapse. Warren suspects this dichotomy could explain why rents in cities like Boston have reportedly fallen by 20 percent or more, even as home prices have climbed.
“In this particular economy, the people who’ve been hardest hit have been in the service sector, whether they’re restaurant or hotel workers or travel industry workers,” Warren said. “And those people are probably not the prime candidates to be buying homes, either as first-time or second-home buyers.” Meanwhile, the professional class has largely stayed afloat, even managing to put more money aside. “The economic impact is that blue-collar and service workers are not able to pay as much in rent, but home prices are skyrocketing.”