State of the Market - Boston (Suffolk County) MA

[Charlie MacPherson]

The numbers are out for Q4, 2018 and the results (vs Q4 2017) show:

• Median Sales Price: $547,000 - up 4.6%
• Average Sales Price: $729,801 - up 5.0%
• % of Original Price Received: 98% - down 0.3%
• # of Home for Sale: 143 - down 1.4%
• Closed Sales: 364 - up 10.0%
• Months Supply: 1.3 - up 1.2%
• Days on Market: 35 - down 13.1%

Translation:  

Prices are up and still rising.  

There's a almost no wiggle room in asking prices.  That's because...

At 1.3 months supply, there is still a wild shortage of homes for sale.  Anything less than 6 months is a seller's market.  1.3 months means that sellers, not buyers are in the driver's seat.

Homes are selling a bit faster at 35 DOM on average.  That's measured from the listing date to closing date.  That number implies that there are a lot of cash buyers as most lenders cannot close that quickly.

I'm skittish on whether investing in the Boston market is still wise.  I reserve the right to be wrong, but I think Boston has to be at or at least very close to peak pricing.  When the average 3-plex on the market is listed at $1.12M, it just feels like there can't be much more headroom.  The 1% rule says you have to get over $3700/month in rent per unit.  In a 3-plex. 

A fix & flip, maybe.  You should be able to get it done before the market does anything "interesting".  I'm nowhere near as confident in a long term buy & hold.

[Phil K.]

Thanks @Charlie MacPherson!

I'm assuming this is in regards to SFR's correct and not multifamily?