MA and Boston Multi-Family data update

[Jonathan Bombaci]

The Massachusetts Multi-Family Market has seen quite a few changes over the last 24 years. The number of Listings, or Active Inventory, is very low compared to prior years which is driving this very strong sellers market over the last few years. This shortage of inventory is driving the average listing price significantly up. As you can see 2019 was our all time high, in terms of average multi-family listing price and then it dropped in 2020. This was from the impact of COVID on the Greater Boston market. Boston, with it’s high prices, drives the majority of the MA real estate market averages at a state level. When Covid hit the prices in Boston were impacted while the suburbs, 30+ minutes outside of Boston, continued to appreciate. Now in 2021 we have bounced back to and as of December 2021 the average listing price is up over $750,000 (graphs below showing monthly data), making right now the most expensive MA multi-family real estate market of all time.

Monthly data through December 2021 for MA in total shows a very strong cyclical market. The big story here is the very apparent lack of inventory in the marketplace. We saw inventory tick up a little bit in September, then decline rapidly through December. Looking back at 2020 we can that there is even less inventory on the market this winter than there was last winter. In addition, having Christmas and New Years fall on Saturdays this year we saw almost no new inventory come on in the last couple of weeks in the year. We are missing 2 weeks of inventory and were anxiously watching the market hoping we see 3 weeks of inventory drop onto the market in the 2nd week of January. Last year was a VERY STRONG sellers market and with inventory levels running even lower this year it is setting us up for an even stronger sellers market going into the spring. In fact we are trying to move up the construction timelines on some of our on-going flips so we can try to take advantage of this massive inventory shortage in the marketplace. We will keep an eye on the multi-family inventory in MA going forward since if we see a sharp increase in inventory this will be a good forward looking indicator that prices may start to soften. Average multi-family listings continue to be at an ALL TIME HIGH. However, based on what we see in the low listing numbers and the very low, less than 3 months of supply, of inventory currently on the market we do not see any indicators in the data to suggest the market will be changing anytime soon.

Given the all time high prices we often get the question of if we see another housing bubble in the future. While I do not have a crystal ball, looking at the data, I think in order for the housing market to crash we will need to see a lot more inventory to come onto the market. This will take some-time to happen and we do not see any indications showing that this has begun. To that point, we are still buying properties in MA and NH ourselves and plan to keep buying to lock in long-term debt with very low interest rates. In fact we are actively working on adding a couple hundred units to our portfolio in MA and NH and we plan to aggressively grow our investment portfolio in 2022 to take advantage of the low interest rates and the increasing rents.