Prices for single-family homes and condos broke records in December 2021, but it is the jump in costs since 2019 that may be the most welcome news for sellers — and the most dreaded for prospective home buyers.
The median cost of a condo in Massachusetts is 9.4 percent higher than in 2020 but has jumped 19.5 percent since 2019, according to a report released Tuesday by The Warren Group, a data analytics firm and publisher of Banker & Tradesman. For a clearer picture, just look at the median condo price in 2019 ($380,000) compared with 2021 ($454,000). That’s a $74,000 bump. The median sales price for December alone, $438,500, was a new high for the month.
Prospective buyers in the single-family market faced even higher prices. The cost of a home was 14.1 percent higher in 2021 than it was in 2020 and up a whopping 27.5 percent compared with 2019. The difference is even more eye-opening when you look it in terms of dollars: The median home price tally for 2021 was $510,000 — $110,000 higher than it was in 2019. It’s the first time that the median year-end sales price has exceeded half-a-million dollars in the state, according to the report, and the market set a record home price for December of $500,000.
“Last year was a wild ride for Massachusetts real estate, and not necessarily one I would want to be on if I were in the market for a new home,” said Tim Warren, Warren Group CEO. In Suffolk County, which includes Boston, Chelsea, Revere, and Winthrop, the median sale price of a single-family home ($690,000) was up 11.3 percent in 2021, while the cost of a condo rose 2.4 percent to $650,000. (Take a look at the county-by-country breakdown for both markets.)
“The condo market had a strong showing in 2021 as anxieties surrounding COVID-19 continued to wane and life got back to normal,” Warren said. “Even when comparing activity on a two-year basis, it’s clear that there is strong demand for condos … As inventory in the single-family market continues to dwindle, this could yield even more competition in the condo market in 2022 as buyers look at condos as an alternative for single-family homes.”
COVID-fueled migration is only partly to blame for the jump in prices in both markets. Single-family home sales in 2021 were down 13.4 percent, and condo sales fell 15 percent, according to the report.
In the condo market, “the year-end median sale price of $510,000 is a strong indicator that the lack of inventory is increasing competition, pushing prices up, and stretching buyers’ budgets thin,” Warren said. “Higher mortgage interest rates may moderate the increases in home prices, but they will keep monthly mortgage payments sky-high. Demand remains high as buyers eagerly await the spring market for a wave of new homes coming to market. But many current homeowners are opting to stay put, which is compounding the inventory issue.”
The rise in prices is particularly discouraging for first-time buyers looking to enter the homeownership ranks in “gateway cities” like Brockton, Worcester, Lowell, and Lawrence. In Worcester alone, which is experiencing a surge in development around Polar Park, the cost of a single-family was 17.8 percent higher than in 2020, while the median purchase price for a condo rose 9.6 percent. (Take a look at the community-by-community breakdown for both markets.)
“The gateway cities are outpacing the elite cities in terms of price appreciation,” Warren told Boston.com, noting that some of the best communities people could have invested in five years ago are those far from Boston, particularly those with options like the commuter rail.
“You’re just going to run out of people who can afford these sky-high rates in the ring around Boston,” he said.