In Sudbury, when a new home comes on the market, would-be buyers line up outside before every open house, says real estate agent Todd Faber. Houses in the already-pricey town — with a median sales price of $1.13 million in 2023 — regularly go for 15 percent over asking. Last month, an agent in Faber’s office sold a house in just four hours.
“Stuff is just not sitting,” says Faber, strategic growth and sales manager with William Raveis. “You still have an inordinate amount of buyers for every opportunity.”
This glaring mismatch between supply and demand has meant soaring prices in Greater Boston for the past several years. The median price for a single-family home in the region was $845,000 last year, up nearly 25 percent since 2020, according to the Greater Boston Association of Realtors. Meanwhile, over the last two years, the number of sales plummeted 33 percent.
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So how did we get here? Real estate experts say there are two major answers, one (hopefully) temporary and one more entrenched: continued high interest rates and the ongoing housing shortage.
The cost of borrowing started going up in early 2022, when the Federal Reserve began raising rates in an effort to fight inflation. The average rate for a 30-year fixed-rate mortgage hit 7.8 percent in November, nearly three times what it was in January 2021. Homeowners, many of whom refinanced into rates below 4 or even 3 percent in 2020 and 2021, are reluctant to sell and end up house hunting in a market of towering prices and high interest rates. So, fewer houses come up for sale, nudging prices up even further and locking the market into an expensive, low-inventory impasse.
“There are a lot of people on the sidelines,” says Cassidy Norton, associate publisher with The Warren Group, a Peabody-based real estate data firm. Among those people on the sidelines: renters looking to buy. Median rent for a two-bedroom apartment in Massachusetts is $3,000 a month — and well over $3,500 in many Boston-area communities — according to ApartmentAdvisor. Renters find themselves stuck on something of a housing hamster wheel, sending so much of their budget to landlords they are unable to save enough for an escalating down payment.
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Exacerbating the problem is the longstanding shortage of housing in Massachusetts. Governor Maura Healey has said the state is short 200,000 housing units, and, in October, her administration unveiled the Affordable Homes Act, a $4 billion proposal to kick-start more development. For now, though, the market is stuck with a stark supply-and-demand fact: “There are more people who need housing than there are houses for sale,” says Daryl Fairweather, chief economist at Redfin, the real estate brokerage.
To get the market moving more freely — and affordably — it’s essential to push policy changes that encourage the construction of housing, Fairweather says. The MBTA Communities Act, adopted in 2021, attempts to get things moving by requiring municipalities along public transit lines to create zoning that would encourage denser development and more multifamily housing. However, some communities, such as Milton, are questioning or outright defying these measures.
In the shorter term, mortgage rates will need to fall. They’ve already edged down from their late 2023 peaks, and the Fed has signaled it may lower its benchmark rate later this year, though that’s far from certain. “Mortgage rates will come down,” Fairweather says. “It’s just a matter of when and how quickly and where they settle.” It is still too soon, however, to know when rates will be low enough to unstick the market.
This Top Spots to Live issue highlights those communities in Greater Boston where prices have increased the most, as compared with prices five years ago. Why focus on sales price? Because we believe it can suggest a signal that these communities are places where many would-be buyers are competing to live, driving up prices.
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But we also know communities are defined by more than price, so we’ve introduced a new component this year, “May We Suggest,” a subjective spotlight of Greater Boston towns and neighborhoods that aren’t at the very top of the price-increase list but have lots of enduring appeal.
We also offer rankings of the most-walkable communities in Greater Boston, based on an analysis by Walk Score, a company owned by Redfin. Young buyers, especially, like to live within walking distance of shops, restaurants, and parks, according to a 2023 Pew survey.
Finally, we take a look at the curious case of falling sales prices in some of the region’s priciest communities — including Belmont, Lincoln, and Brookline — which all saw declines between 2022 and 2023 (though all still have an upward trajectory compared with five years ago). What do cracks showing in some gilded communities suggest about prices for the rest of us?
Explore the Top Spots to Live by region:
Plus:
METHODOLOGY: Determining a “top” place to live is a subjective exercise, one with as many possible outcomes as there are home buyers. To arrive at this annual list, we rely on the finite but nonetheless valid wisdom of supply and demand: Significantly increasing prices in these communities suggest many buyers would like to call them home. We analyzed median home prices from 2018 and 2023 to find the biggest five-year increases across three price tiers for each region. In the suburbs, we looked at single-family data from The Warren Group, excluding communities with fewer than 50 sales in 2023. For Boston and Cambridge neighborhoods, we used median home price data — including both single-family and condo sales — from Redfin. Four journalists with real-estate expertise collaborated to select “May We Suggest” entries.
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Sarah Shemkus is a frequent contributor to the Globe Magazine. Jon Gorey contributed additional reporting. Send comments to [email protected].
Correction: Due to a reporting error, a previous version of this story misidentified the sales agent for a Sudbury home. An agent in Todd Faber’s office sold the house.